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What are the provisions to protect the interest of small depositors?
Small depositor is a depositor who has deposited a sum not exceeding Rs. 20000 in a company in a financial year. The following are the provisions to protect the interest of small depositors:
1) If a company is accepting any deposit from small depositors then it shall inform Company Law Board of any default made by it in repayment of deposits or interest.
2) No further deposits should be accepted by the company unless each small depositor has been paid the amount of his deposit and interest thereon.
3) If a company has made a default in repayment of deposit of the payment of interest to a small depositor, shall state, in every further advertisement and application form inviting deposits from the public, the total number of small depositors and the amount due to them in respect of which default has been made.
4) If any amount of interest has been waived off on the deposits of a small depositor then this shall be mentioned by the company in every advertisement.
5) Every application form issued to a small depositor by the company shall contain a statement stating that the applicant has been appraised of-
a. Every past default of the company in the repayment of deposit or interest thereon.
b. The waiver of interest if any and reasons thereof.
6) A company fails to comply with the above requirements, shall be punishable with the imprisonment upto 3 years and shall be liable to pay fine of not less than Rs. 500 per day during which default continues.
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