On 30th June 2023, Sunrise Infratech Limited, raised secured deposits amounting to 160 crore from the public at an interest rate of 12% per annum,…

As per second proviso to section 76(1) of the Companies Act, 2013, every company which accepts secured deposits from the public shall within 30 days of such acceptance, create a charge on its assets. The amount of charge shall not be less than the amount of deposits accepted. The charge shall be created in favour of the deposit holders in accordance with the prescribed rules. In respect of creation of security, Rule 6 of the Companies (Acceptance of Deposit) Rule, 2014, states that the company accepting secured deposits shall create security by way of charge on its tangible assets only. The other notable points are: The company cannot create charge on intangible assets (i.e. goodwill, trade-marks, etc.).Total value of security should not be less than the amount of deposits accepted and interest payable thereon. In the given question, Particulars Amount (in ₹) Total value of security (value of assets on which charge can be created) 110+30+20 [Land and Building, Plant & machinery and Factory Shed] = 160 crore Total deposits accepted and interest payable thereon 160+ [(160*12%)*3 years] = 217.6 crore Since, the total value of security is less than the amount of deposits accepted and interest payable thereon, hence the charge is not validly created.