Comment if the following transactions entered into by Solace Ltd. attract compliance with provisions relating to acceptance of deposit: (i) A sum of ₹5 lakh paid by Jeevan towards subscription to equity shares on 1st Apr

Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 provides for inclusions and exclusions under the term 'deposit' for the purpose of compliance of the Companies (Acceptance of Deposits) Rules, 2014. Subscription money adjusted against sales invoices: Sub-rule (vii) provides that the subscription money received against issue of securities is not a deposit provided in case of non-allotment of securities, the money is refunded to the subscriber within 60 days from the receipt of money. Further, adjustment of the money for any other purpose shall not be considered as a refund. Hence the amount paid by Jeevan shall be considered as a deposit. Loan from director taken from Indian Bank: Sub-rule (viii) provides that money received from a director as loan is not deposit provided the money is not given by the director out of any loan taken by him from others. In this case, since the amount advanced by the Director to the company was given out of funds borrowed by the Director from Indian Bank, it does not fall under the exclusion and hence it is a case of Deposit. Life-time warranty payment: Sub-rule (xii)(e) excludes from deposit, any advance received for warranty and maintenance, if the warranty period does not exceed the period prevalent as per common business practice or 5 years whichever is less. In this case, as it is a life-time warranty, it does not fall under the exclusion and hence it is a deposit. However, if the life of machinery is less than 5 years then the amount shall not be treated as Deposit. Contribution to Housing Society: Sub-rule (xi) excludes from deposit any non-interest-bearing amount received and held in trust. In this case, company has received the amount in trust for a housing society to be formed for the benefit of the employees and the money is not interest bearing. Hence it is not a deposit.