Secretarial Practice Class 12 Commerce Ch. 8.

Correspondence with Depositors

Detailed Notes on "Correspondence with Depositors" (Chapter 8)

Introduction to Deposits

• Deposit as a Source of Finance: Accepting deposits from the public or its members is a source for
companies to raise funds.

• Purpose: Primarily used to satisfy short-term working capital needs of the company.

• Cost and Control: It is cheaper to raise funds through deposits and involves no dilution of
control as it's a type of short-term loan.

• Risk: Accepting deposits can be a risky option for a company if it defaults on repayment.

• Interest: Companies are liable to pay regular interest at a fixed rate on deposits, along with the
principal amount on maturity.

• Secretary's Role: The Company Secretary conducts correspondence with depositors regarding
acceptance, payment of interest, renewal, and repayment of deposits on behalf of the company and
as per Board instructions.

Acceptance of Deposits Companies accepting deposits must comply with:

• Sections 73 to 76 of the Companies Act, 2013.

• Companies (Acceptance of Deposits) Rules 2014.

• Directives issued by the Reserve Bank of India (RBI).

• Exemptions: Banking Companies, Non-Banking Finance Companies (NBFCs), Housing Finance

Companies, and other Central Government-specified companies are exempt from these provisions.

Companies that Can Collect Deposits

1. Private Company: Can accept deposits from its members, Directors, or relatives of Directors.

2. Public Company (Other than Eligible Company): Can accept deposits from its members or
directors.

3. Eligible Public Company: Can accept deposits from their members and also from the public.

o Definition: A company having a Net Worth of not less than ₹100 crores OR a Turnover of
not less than ₹500 crores, and which has obtained prior approval of its shareholders
through a special resolution for accepting public deposits.

▪ Net Worth: Total of paid-up capital + Free Reserves + Securities Premium Account,
after deducting accumulated losses, deferred expenses, and unwritten-off
miscellaneous expenses.

▪ Turnover: Income from sales for a particular period.

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4. Government Company: Can accept deposits from the public.

Terms and Conditions for Acceptance of Deposits

1. Amount of Deposit:

o Private Company: Not more than 100% of its aggregate of paid-up share capital and free
reserves (though certain classes may exceed this).

o Public Company (other than Eligible Company): Cannot accept fresh deposits if the
amount, along with previous deposits, exceeds 25% of the aggregate of paid-up share
capital and free reserves.

o Eligible Public Company:

▪ From Members: Not exceeding 10% of aggregate of paid-up share capital and free
reserves.

▪ From Public: Not exceeding 25% of aggregate of paid-up share capital and free
reserves.

o Government Company: Not exceeding 35% of the paid-up share capital and free
reserves.

2. Period / Tenure of Deposit:

o Minimum period: Six months.

o Maximum period: Thirty-six months.

o Exception for short-term needs: Deposits repayable earlier than six months (minimum
three months) can be accepted, but the amount cannot exceed 10% of aggregate of paid-up
share capital and free reserves.

o Renewal is considered a fresh deposit.

3. No Demand Deposit: Company cannot accept or renew deposits repayable on demand.

4. Secured or Unsecured Deposit: Must be clearly mentioned in the circular/advertisement.

o Secured Deposits: Company must create a charge on its tangible assets within 30 days
of acceptance.

5. Application Form: Must be provided by the company and include a declaration from the applicant
that the deposit is not from borrowed money.

6. Joint Names: Deposits can be accepted in joint names (maximum 3 names).

7. Nomination: Depositor has the right to nominate a person.

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8. Circular or Advertisement:

o Circular: Issued when inviting deposits from members.

o Advertisement: Issued when inviting deposits from the public.

o Contents: Must include financial position, portion of secured/unsecured deposits, credit

rating (for eligible public companies), scheme details, Deposit Trustee name, and details of
previous due deposits.

o Filing: A copy signed by all directors must be filed with the Registrar of Companies (RoC).

o Issue: Can be issued only after 30 days of filing with the RoC.

o Sending (Circular): Via registered post, speed post, courier, or email to members.

o Publishing (Advertisement): In one English newspaper and one vernacular newspaper with
wide circulation in the state of the registered office.

o Validity: Valid for 6 months from the end of the financial year of issue or the date of the AGM,
whichever is earlier.

9. Appointment of Deposit Trustee:

o Required for eligible companies and public companies issuing secured deposits.

o Trustees protect depositors' interests.

o Trust Deed: A contract signed with trustees, executed at least 7 days before issuing the
circular/advertisement.

10. Deposit Insurance:

o Required at least 30 days before issuing circular/advertisement.

o If deposit + interest is up to ₹20,000, full insurance is taken.

11. Obtain Credit Rating:

o Every company must get credit rating for its deposits and include it in the
circular/advertisement.

o Rating must be obtained every year during the tenure of deposits.

12. Open Deposit Repayment Reserve Account:

o Must be opened in a scheduled bank.

o By April 30th each year, deposit not less than 15% of deposits maturing during the current
and following financial year.

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o Used only for repaying deposits.

o Not applicable to private companies accepting deposits from members not exceeding 100% of
aggregate paid-up capital and free reserves.

13. Deposit Receipt:

o Issued to depositors within 21 days from the date of receipt of money or cheque
realization.

o Contains depositor's name, address, amount, interest rate, and repayable date.

14. Register of Deposit:

o Company must maintain a separate register at its registered office.

o Details to be entered within 7 days from the date of issue of Deposit Receipt.

15. Return of Deposit:

o Company must file with the RoC on or before June 30th every year.

o Contains details of deposits as on March 31st of that year.

16. Interest:

o Maximum rate depends on RBI guidelines.

o Premature repayment: Company can deduct 1% interest from the stated rate.

o Overdue deposits: Company pays a penal rate of 18% for the overdue period.

17. Right to Alter Terms and Conditions: A company cannot alter the terms and conditions of deposit,
trust deed, or insurance contract once the circular/advertisement is issued and deposits are accepted.

18. Disclosure in Financial Statements: Money received from Directors (or relatives in private
companies) must be disclosed in financial statements as notes.

19. Punishment: Officers in default for contravention of Act provisions are punishable for fraud.

o Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 also
applies.

Precautions to be taken by the Secretary while Corresponding with Depositors

1. Legal Provisions: Ensure compliance with provisions related to invitation, acceptance, renewal, and
repayment of deposits.

2. Courtesy: Use polite language; avoid rude words.

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3. Prompt Response: Respond quickly to queries and complaints.

4. Accuracy: Provide accurate, factual, and correct information.

5. Image and Goodwill: Maintain a good image of the company through correspondence.

6. You Attitude: Write from the depositor's point of view, considering their requirements.

7. Conciseness: Keep letters short, brief, and to the point; avoid irrelevant information.

8. Maximum Secrecy: Maintain utmost secrecy regarding confidential information.

Circumstances under which a Secretary has to Enter into Correspondence with Depositors

1. Thanking depositors for depositing the amount and showing faith in the company.

2. Intimation about payment of interest through:

o Interest Warrant.

o Electronic payment (ECS/NEFT).

3. Letter informing about renewal of deposits.

4. Informing depositors about repayment of deposit on maturity.

Answers to Exercise Questions (Chapter 8)

Q.1 A) Select the correct answer from the options given below and rewrite the statements.

1. Deposit is a type of short term loan.

2. Eligible public company and Government Company can collect deposits from Public.

3. Private company can accept deposits from its member or Directors upto not more than 100 % of its
aggregate of paid-up share Capital and free reserves.

4. A Government Company can accept deposits from public not exceeding 35% of its paid-up share
Capital and free reserves.

5. Deposit can be accepted for a minimum of 6 months and maximum for 36 months.

6. Company issues Circular to invite its members to subscribe for its deposit scheme.

7. Company can issue circular or advertisement for inviting deposits after 30 days of filing it with
Registrar of Companies.

8. Company has to appoint Deposit Trustees to protect the interest of depositors.

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9. Charge on assets is to be created when a company issues Secured deposit.

10. Deposit Receipt is issued within 21 days of receipt of deposit.

11. For premature repayment of deposit, company deducts 1% of interest.

12. Return of deposit must be filed every year on or before 30th June.

Q.1 B) Match the pairs.

• a) Private Company – 5) 100% aggregate of paid-up share capital + free reserves

• b) Deposit Trust Deed – 2) Signed at least 7 days before issuing advertisement

• c) Secured Deposit – 4) Charge on tangible assets

• d) Tenure of deposit – 8) Maximum 36 months

• e) Return of Deposit – 10) File on or before 30th June every year

Q.1 C) Write a word or a term or a phrase which can substitute each of the following statements.

1. Return on investment on deposit. – Interest

2. Instrument for payment of interest on deposit. – Interest Warrant

3. An acknowledgement of the fixed deposit accepted by a company. – Deposit Receipt

4. Return of deposits on maturity date. – Repayment of Deposit

5. Maximum period of deposits. – 36 months

Q.1 D) State whether the following statements are true or false.

1. Return of deposit must be filed every year on or before 31st March. – False

o Correction: It must be filed on or before 30th June every year.

2. Eligible public company can collect deposits from its members. – True

3. Government company can collect deposits from its members. – False

o Correction: Government companies accept deposits from the public.

4. A private company can collect deposits from the general public. – False

o Correction: Private companies accept deposits from members, directors, or relatives of directors.

5. Deposit can be accepted for a maximum of 36 months. – True

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6. Eligible public company can collect deposits from public not exceeding 35% of its paid-up share
capital and free reserves. – False

o Correction: Eligible public companies can collect up to 25% from public, while Government
companies can collect up to 35%.

7. For secured deposits, company has to create a charge on its tangible assets. – True

8. Deposit Receipt is issued within 21 days of receipt of deposits. – True

9. Company appoints Credit Rating Agency to protect the interest of Depositors. – False

o Correction: Company obtains credit rating for its deposits. Deposit Trustees protect the interest
of depositors.

10. Deposit Trust Deed is an agreement between company and Deposit Trustee. – True

Q.1 E) Find the odd one.

1. Dividend, Depositor, Deposit Receipt – Depositor (Dividend and Deposit Receipt are related to
returns/documentation, Depositor is the person)

2. Trust Deed, Depository, Deposit Receipt – Depository (Trust Deed and Deposit Receipt are
documents related to deposits, Depository is a system for securities)

3. Appointment of Deposit Trustee, Appointment of Registrar of companies, Appointment of Credit

Rating Agency. – Appointment of Registrar of companies (Other two are appointments related to
deposit acceptance process)

Q.1 F) Complete the sentences.

1. Deposit is a type of short term loan.

2. Eligible Public company and Govt. Company can accept deposits from Public.

3. To collect deposits from public, Eligible public company must have a net worth of not less than ` 100
crores.

4. A Government company can accept deposits from public not exceeding 35%.

5. Deposits can be accepted or renewed for a period not less than 6 months and not more than 36
months.

6. Company cannot accept or renew deposits repayable on demand.

7. Premature repayment of deposits can be done by a company but not before 3 months.

8. To invite the public to subscribe for its deposits, a company issues Advertisement.

9. Agency which gives ratings of the deposits of a company is called Credit Rating Agency.

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10. Account which is used only for repaying deposits is called Deposit Repayment Reserve Account.

Q.1 G) Select the correct option from the bracket.

• a) Government Company – Deposits from public

• b) Private Company – Deposits from members

• c) 36 months – Maximum Period of Deposits

• d) Minimum Period of Deposits – 6 months

• e) Return of deposit – File on or before 30th June

Q.1 H) Answer in one sentence.

1. Which companies can accept deposits from public ? – Eligible Public Companies and Government
Companies can accept deposits from the public.

2. What is the maximum deposit the Government company can collect ? – A Government company can
collect deposits from public not exceeding 35% of its paid-up share capital and free reserves.

3. What is the tenure of a deposit ? – The tenure of a deposit must be a minimum of 6 months and
a maximum of 36 months.

4. Who are Deposit Trustees ? – Deposit Trustees are institutions appointed to protect the interest
of depositors.

5. What is Deposit Trust Deed? – Deposit Trust Deed is a contract between the company and the
Deposit Trustees, containing the terms and conditions of the agreement.

6. When does a company create charge on its tangible assets ? – A company creates a charge on its
tangible assets within 30 days of acceptance of secured deposits.

7. Within what period should a company issue Deposit Receipt ? – A company should issue a Deposit
Receipt within 21 days from the date of receipt of money or realization of the cheque.

8. When should a company file Return of Deposit ? – A company should file a Return of Deposit with
the Registrar of Companies on or before 30th June every year.

9. What is Deposit Repayment Reserve Account ? – A Deposit Repayment Reserve Account is an

account opened in a scheduled bank specifically for repaying deposits.

10. What is Register of Deposit? – The Register of Deposit is a separate register maintained by the
company at its registered office to record details of deposits accepted or renewed.

Q.1 I) Correct the underlined words and rewrite the following sentences.

1. Depositors are creditors of the company.

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2. Deposits are the external source of financing.

3. Deposit is a short term source of capital.

4. Depositors are entitled to receive interest.

Q.1 J) Arrange in proper order.

1. c. Deposit Receipt b. Acceptance of Deposits a. Renewal of Deposit (The correct order would logically
be: b. Acceptance of Deposits, c. Deposit Receipt, a. Renewal of Deposit)

2. c. Acceptance of Deposits b. Deposit Receipt a. Payment of Interest (The correct order would logically
be: c. Acceptance of Deposits, b. Deposit Receipt, a. Payment of Interest)

Q.2 Explain the following terms / concepts.

1. Eligible Public Company

o An eligible public company is one that can accept deposits from both its members and the
public. To qualify as an eligible public company, it must have a net worth of not less than ₹100
crores or a turnover of not less than ₹500 crores, and it must obtain prior approval from its
shareholders through a special resolution for accepting public deposits.

2. Tenure of Deposit

o The tenure of deposit refers to the period for which a deposit is accepted or renewed by a
company. According to regulations, no deposit can be accepted or renewed for a period less
than six months or more than thirty-six months. In specific circumstances to meet short-term
needs, deposits can be accepted for a minimum of three months, but such amounts cannot
exceed 10% of the aggregate paid-up share capital and free reserves.

3. Secured Deposit

o A secured deposit is a type of deposit accepted by a company where a charge is created on its
tangible assets as security for the loan. This security must be created within 30 days of the
acceptance of deposits. The minimum amount of security should be equal to the amount not
covered by Deposit Insurance.

4. Deposit Trustee

o Deposit Trustees are institutions appointed by companies, especially when issuing secured
deposits or inviting more than 500 persons to buy deposits. Their primary role is to protect
the interests of the depositors. A company signs a contract called a Deposit Trust Deed with
these trustees, outlining the terms and conditions.

5. Charge on tangible assets

o A charge on tangible assets means that the company's physical assets (like land, building,
machinery) are pledged as security in favor of the Deposit Trustees. This provision applies
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when a company issues secured deposits, and the charge must be created within 30 days of
accepting the deposits. This gives depositors a claim on specific assets in case the company
defaults on repayment.

6. Deposit Insurance

o Deposit insurance is a protective measure requiring companies to enter into an agreement

with an Insurance Company to insure the deposits. This agreement must be signed at least 30
days before the circular or advertisement for deposits is issued. If the deposit amount plus
interest is up to ₹20,000, full insurance must be taken.

7. Deposit Repayment Reserve Account

o This is a special account that every company accepting deposits must open in a scheduled
bank. Annually, on or before April 30th, the company must deposit an amount not less than
15% of the deposits maturing during the current and following financial year into this
account. This fund is exclusively used for the repayment of deposits.

8. Credit Rating

o Credit rating refers to an assessment of a company's ability to repay its deposits on time, given
by a Credit Rating Agency. Companies are required to obtain such ratings for their deposits
and include them in the circular or advertisement. The rating considers factors like net worth,
liquidity, and repayment capability, and it must be obtained annually during the deposit's
tenure.

9. Deposit Receipt

o A Deposit Receipt is a formal acknowledgment of debt issued by a company to a depositor

upon receiving the deposit money. It contains essential details such as the depositor's name
and address, the amount of the deposit, the rate of interest payable, and the date of
repayment. This receipt must be issued within 21 days from the date of receipt of the money
or realization of the cheque.

10. Return of Deposit

o The Return of Deposit is a document that a company is legally required to file with the
Registrar of Companies annually. This return provides detailed information about all deposits
held by the company as of March 31st of that year. The deadline for filing this return is on or
before June 30th every year.

Q.3 Study the following case / situation and express your opinion.

1. Apple Company Ltd. plans to raise funds through Public Deposits. It’s net worth is ₹10 Crores.

o a. Can they accept deposits from the public ? – No, Apple Company Ltd. cannot accept deposits
from the public because it is not an "Eligible Public Company". An eligible public company
needs a net worth of not less than ₹100 crores or a turnover of not less than ₹500 crores.

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o b. Can they accept deposits which matures after 4 years. – No, the company cannot accept
deposits that mature after 4 years (48 months). The maximum tenure for deposits is 36
months.

o c. Within what period should the company issue deposit Receipt to it’s depositors ? – The
company should issue a deposit Receipt to its depositors within 21 days from the date of
receipt of money or realization of the cheque.

2. ABC Company Ltd. is an eligible Public Company as per the Companies Act, 2013 with reference
to accepting Public Deposits.

o a. Can the company accept deposits in joint names ? – Yes, the company can accept deposits
in joint names of depositors, up to a maximum of 3 names.

o b. Can the company accept deposits from it’s members ? – Yes, an eligible public company can
accept deposits from its members.

o c. Can the company issue secured deposits ? – Yes, a company can accept secured deposits,
provided it clearly mentions this in the circular or advertisement and creates a charge on its
tangible assets within 30 days of acceptance.

3. Apple Company Ltd. is an eligible Public Company. It plans to raise secured deposits from the
public. Please advice its Board on the following.

o a. Does the company need to get shareholders approval for accepting deposits ? – Yes, as an
eligible public company accepting deposits from the public, it needs to obtain prior approval
of its shareholders through a special resolution.

o b. Does the company have to appoint a Debenture Trustee ? – No, it has to appoint a Deposit
Trustee, not a Debenture Trustee. A company issuing secured deposits (which Apple Co. Ltd.
plans to do) or inviting more than 500 people must appoint one or more Deposit Trustees to
protect the interest of depositors. Debenture Trustees are for debentures.

o c. Within what period should the company create a charge on it’s assets ? – The company
should create a charge on its tangible assets within 30 days of acceptance of deposits.

4. SUN Pvt. Ltd. company wants to raise funds through deposits.

o a. Can the company accept deposits from the public ? – No, a private company cannot accept
deposits from the general public. It can only accept deposits from its members, Directors, or
relatives of Directors.

o b. Which document should the company issue to invite deposits ? – Since it is a private
company and can only invite deposits from its members, Directors, or their relatives, it should
issue a circular.

o c. What is the maximum period for which they can accept deposits ? – The maximum period
for which they can accept deposits is 36 months.

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Q.4 Answer in brief.

1. State the amount of deposits that different types of companies can collect by way of deposits.

o Private Company: Can accept deposits from its members or Directors or relatives of
Directors not more than 100% of its aggregate of paid-up share capital and free reserves.

o Public Company (other than eligible company): Cannot accept fresh deposit from
members if the amount, along with previous deposits, exceeds 25% of the aggregate of
paid-up share capital and free reserves.

o Eligible Public Company: Can accept deposits from members not exceeding 10% and from
the public not exceeding 25% of the aggregate of paid-up share capital and free reserves.

o Government Company: Can accept deposits from public not exceeding 35% of the paid-up
share capital and free reserves.

2. State the contents of circular or Advertisement for Deposit. The circular or advertisement
inviting deposits must contain:

o Statement about the financial position of the company.

o The portion of secured and unsecured deposit of fresh issue.

o Credit rating obtained from a Credit Rating Agency (only for eligible public company).

o Details of the scheme.

o Name of Deposit Trustees.

o Amount due towards deposits of any previous deposits accepted by the company.

3. State the provisions regarding appointment of Deposit Trustee.

o A company inviting more than 500 persons or issuing secured deposits must appoint one or
more Deposit Trustees.

o The trustees protect the interest of the depositors.

o A Deposit Trust Deed, outlining the terms and conditions, must be signed with the trustees
at least 7 days before issuing the circular or advertisement.

o The Deposit Trustee can call a meeting of depositors if the company defaults.

4. State any four terms and conditions regarding acceptance of Deposit.

o Period/Tenure: Deposits can be accepted for a minimum of six months and a maximum of
thirty-six months.

o No Demand Deposit: Companies cannot accept or renew deposits repayable on demand.

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o Secured or Unsecured: Deposits can be secured or unsecured, and this must be clearly
stated in the invitation. If secured, a charge on tangible assets must be created within 30 days.

o Deposit Receipt: A Deposit Receipt must be issued to the depositors within 21 days from the
date of receipt of money or realization of the cheque.

o Credit Rating: Companies must obtain a credit rating for their deposits from a recognized
agency and include it in the circular/advertisement.

o Deposit Repayment Reserve Account: Companies must open a separate account in a

scheduled bank and annually deposit at least 15% of maturing deposits into it for repayment.

Q.5 Justify the following statements.

1. All companies cannot accept deposits from public.

o This is true because only Eligible Public Companies (those meeting specific net worth or
turnover criteria and having shareholder approval) and Government Companies are
permitted to accept deposits from the general public. Private companies and other public
companies are restricted to accepting deposits only from their members, directors, or
relatives of directors.

2. There is a limit or restriction on the amount that a company can collect as Deposits.

o This statement is true. The Companies Act, 2013, along with the Companies (Acceptance of
Deposits) Rules, 2014, sets specific limits on the amount of deposits a company can accept.
For instance, a private company has a 100% limit of its paid-up share capital and free reserves
from members, while eligible public companies can accept only up to 25% from the public
and 10% from members, and Government companies up to 35% from the public. These limits
ensure financial prudence and protect depositors' interests.

3. Company has to fulfill certain provisions related to issue of circular or advertisement.

o This is true. To invite deposits, a company must issue either a circular (for members) or an
advertisement (for public). Before doing so, a copy of this document, signed by all directors,
must be filed with the Registrar of Companies. The company can only issue the circular or
advertisement to the public 30 days after this filing. This ensures transparency and
regulatory oversight.

4. While issuing secured deposits, company has to appoint Deposit Trustee.

o This statement is true. The Companies (Share Capital and Debentures) Rules, 2014 (Rule 18)
mandates that companies issuing secured debentures must appoint a Debenture Trustee.
Similarly, for deposits, if a company is issuing secured deposits, it has to appoint one or more
Deposit Trustees. This appointment protects the interests of the depositors by having an
independent party oversee the security created on the company's assets.

5. Companies have to create a charge on their tangible assets while issuing secured deposits.

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o This is true. For secured deposits, it is a mandatory provision that a company must create a
charge on its tangible assets within 30 days of accepting the deposits. This charge serves as
collateral, giving the depositors a legal claim on those assets in case the company fails to repay
the principal or interest, thus enhancing the security of their investment.

6. Company issuing deposit must open Deposit Repayment Reserve Account.

o This is true. Every company accepting deposits is required to open a Deposit Repayment
Reserve Account in a scheduled bank. This account ensures that funds are set aside
specifically for the redemption of deposits. Annually, by April 30th, the company must deposit
at least 15% of the deposits maturing in the current and next financial year into this account.
This safeguards depositors' funds and facilitates timely repayment.

Q.6 Answer the following questions.

1. Explain the type of companies that can raise deposits along with the maximum amount they
can raise as deposits.

o Private Companies: Can accept deposits from their members, Directors, or relatives of
Directors. The maximum amount they can collect is generally 100% of their aggregate
paid-up share capital and free reserves.

o Public Companies (other than Eligible Companies): Can accept deposits only from their
members or directors. The maximum amount they can accept is 25% of their aggregate
paid-up share capital and free reserves.

o Eligible Public Companies: These are companies with a net worth of at least ₹100 crores or
a turnover of at least ₹500 crores, and they have shareholder approval. They can accept
deposits from members (up to 10%) and from the public (up to 25%) of their aggregate
paid-up share capital and free reserves.

o Government Companies: Can accept deposits only from the public. The maximum amount
they can collect is 35% of their paid-up share capital and free reserves.

2. Explain the provisions related to circular or advertisement for inviting deposits. The provisions
related to the circular or advertisement for inviting deposits are crucial for transparency and
regulatory compliance:

o Type of Document: A company issues a circular if it invites deposits from its members, and
an advertisement if it invites deposits from the public.

o Contents: Both the circular and advertisement must include a detailed statement of the
company's financial position, specify the portion of secured and unsecured deposits, mention
the credit rating obtained (mandatory for eligible public companies), provide details of the
deposit scheme, name the Deposit Trustees, and disclose any amounts due from previous
accepted deposits.

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o Filing with RoC: A copy of the circular or advertisement, signed by all directors, must be
filed with the Registrar of Companies.

o Timing of Issue: The company can only issue or publish the circular or advertisement 30
days after it has been filed with the Registrar of Companies. This waiting period allows
for regulatory review.

o Mode of Delivery: Circulars to members can be sent via registered post, speed post, courier,
or email. Advertisements for the public must be published in one English newspaper and
one vernacular newspaper with wide circulation in the state where the company's
registered office is located.

o Validity: The circular or advertisement is valid for six months from the end of the financial
year in which it was issued or the date on which the Annual General Meeting was held,
whichever is earlier. This ensures that the information provided remains current.

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