Question

Accepting of deposits from public in case of private company is ____________.

• A. prohibited
• B. restricted
• C. acceptable
• D. None of these

Answer 1

Answer: (A)

prohibited

Companies borrow from various sources like banks and various other financial institutions. Whereas,Public Limited Companies borrow from mass public by accepting public deposits.

Private Companies are strictly prohibited from accepting any loan or deposits from the public. As per definition of Private limited Company as given under section 2 clause 68 of Companies Act, 2013. Private Company means a Company which by its articles prohibits any invitation to the public to subscribe for any securities of the company.