(a) (i) As per sub- clause vii of Rule 2 (1) (c) of Companies (Acceptance of
Deposits) Rules, 2014:
(i) Any amount received and held towards subscription to any
securities (including share application money or advance towards
allotment of securities, pending allotment), so long as such
amount is appropriated only against the amount due on
allotment of the securities applied for.
It is clarified by way of Explanation that if the securities for which
application money or advance for such securities was received
cannot be allotted within 60 days from the date of receipt of the
application money or advance for such securities and such
application money or advance is not refunded to the subscribers
within 15 days from the date of completion of 60 days, such
amount shall be treated as a deposit under these rules.
In the light of the facts of the question and provisions of Law:
-
IQ Books Limited received the share application money on
8th
December,
2024
and
refunded
the
same
on
20th February, 2025.
CORPORATE AND OTHER LAWS
Therefore, IQ Books Limited has kept the money for (24+31+19)
74 days with them which is less than (60 days + 15 days) 75 days
to be considered the money as deposits.
Hence, 50 crore received by IQ Books Limited will not be
considered as deposit as it was refunded within the prescribed
time limit.
(ii) As per sub-clause (xiii) of Rule 2 (1) (c) of Companies (Acceptance of
Deposits) Rules, 2014, any amount brought in by the promoters of
the company by way of unsecured loan in pursuance of the
stipulation of any lending financial institution or a bank subject to the
fulfillment of following conditions:
(a) the loan is brought because of the stipulation imposed by the
lending institutions on the promoters to contribute such finance;
(b) the loan is provided by the promoters themselves or by their
relatives or by both; and
(c) such exemption shall be available only till the loans of financial
institution or bank are repaid and not thereafter.
In the given question, the amount of 40 crore brought in by Suraj (Rs.
10 crore), Raj (Rs. 15 crore) and Tejas (₹ 15 crore through his father
Mr. K), will not be treated as deposit as this amount brought by the
promoters of Precious Jewellers Limited fulfill all the conditions as
prescribed by the Act.
(iii) As per sub-clause (ixa) of Rule 2(1)(c) of companies (Acceptance of
Deposits) Rule, 2014, any amount raised by issue of non-convertible
debenture not constituting a charge on the assets of the company
and listed on a recognized stock exchange as per applicable
regulations made by Securities and Exchange Board of India, will not
be treated as deposit.
In the given question, the amount of ₹ 125 crore raised by Pretty
Cosmetics Limited will be treated as deposit as the company has
created a charge on its assets in favour of the debenture holders.
(b) As per Section 34 of the Companies Act, 2013, where a prospectus, issued,
circulated or distributed, includes any statement which is untrue or
misleading in form or context in which it is included or where any
inclusion or omission of any matter is likely to mislead, every person who
authorizes the issue of such prospectus shall be liable under section 447
of the Companies Act, 2013.
Right of Recission
A person who has purchased shares from the company on the basis of the
prospectus containing untrue and misleading statement of material facts
is entitled to apply to the court for the rescission of the contract, under
the relevant provisions of the Indian Contract Act 1872.
Exceptions - When right of rescission is not available?
As per the Contract Act, 1872, right to rescind allotment of shares will not
be available to the subsequent purchasers of shares from the market.
In the given question, Mr. C subscribed to 1,000 shares of Spark Services
Limited (on the basis of a prospectus which provided false statements
related to Mr. T being one of the directors and that the company
intended to utilize certain raised funds towards community service). Mr. D
purchased 250 shares from Mr. C (i.e. he did not purchase shares on the
basis of the prospectus containing untrue and misleading statement).
In the light of the above provisions Mr. C can rescind the contract as he
purchased shares on the basis of the false statements in prospectus.
However, Mr. D cannot rescind the contract.
(c) Provisions under the Companies Act, 2013
Chief Financial Officer (CFO) comes within the definition of Key
Managerial Personnel (KMP) as defined in Section 2(51) read with Section
203(1) of the Companies Act, 2013.
Section 203(3) of the Companies Act, 2013 provides that Whole Time Key
Managerial Personnel shall not hold office in more than one company
except in its subsidiary company at the same time.
Provisions under the General Clauses Act, 1897
Section 13(2) of the General Clauses Act, 1897 provides that in all Central
Acts and Regulations, unless there is anything repugnant in the subject or
context, words in the singular shall include the plural, and vice versa.
CORPORATE AND OTHER LAWS
With respect to the issue that whether a Whole Time KMP of a holding
company be appointed in more than one subsidiary company or can be
appointed in only one subsidiary company.
It can be noted that Section 13 of the General Clauses Act, 1897 provides
that the word ‘singular’ shall include the ‘plural’, unless there is anything
repugnant to the subject or the context.
Hence, Purva, the CFO (Whole Time Key Managerial Personnel) may hold
office in more than one subsidiary company (i.e. ACL and SBL) as per the
present law.