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of <h1>Companies Prefer Public Deposits Over Loans; Section 58A Sets Rules, Requires Financial Statement Ads, and Limits Violations Penalized</h1> Under the Companies Act, 1956, companies often prefer raising finance through public deposits rather than loans. Section 58A allows the Central Government, with RBI consultation, to set rules for deposit acceptance. Companies must issue a financial statement advertisement before inviting deposits and must not default on repayments. Exemptions include banking and certain financial companies. Depositors can nominate under Section 58A(11). Deposits in a minor's name require a guardian's signature. Joint deposits correspond with the first named person. Defaults to small depositors must be reported within 60 days. Violations of deposit limits result in fines and possible imprisonment for company officers.
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