Referring to the provisions of Companies Act, 2013 (ACT), comment on the following: Just like the provisions of the Act on debentures, appointment of Deposit Trustee is not mandatory for all companies when the number of

The statement is not true. Appointment of independent deposit trustees is to safeguard the interests of the depositors. Appointment of deposit trustee is mandatory for companies accepting deposits from its members under section 73(2) of the Companies Act, 2013 (the Act) and also for eligible companies accepting deposits from the public under section 76(1) of the Act. According to Rule 7(1) of Companies (Acceptance of Deposit) Rules, 2014, no company referred to in sub-section (2) of section 73 or any eligible company shall issue a circular or advertisement inviting secured deposits unless the company has appointed one or more trustees for depositors for creating security for the deposits. Whereas According to Section 71(5) of the Act read with Rule 18(2) of Companies (Share Capital and debentures) Rules, 2014, appointment of debenture trustee for a company is mandatory for a company issuing debentures when the number of debenture holders exceeds five hundred. Hence, the appointment of deposit trustee is mandatory for companies accepting deposits irrespective of the number of deposit holders.