Company has to fulfill certain provisions relating to issue of circular or advertisement.

Answer: The statement is justified.

A company inviting deposits from members or the public must issue a circular or advertisement (Form DPT-1) to give depositors correct information. The law requires:

• The circular must be approved by the Board and signed by a majority of directors.
• It must contain the prescribed details: financial position, credit rating, amount and period of deposits, rate of interest, whether secured or unsecured, details of deposit trustee, and the auditors’ report on profits and losses.
• A copy must be filed with the Registrar of Companies at least 30 days before issue.
• It must be published in English in an English newspaper and in a vernacular newspaper circulating in the state of the registered office, and placed on the company’s website.
• It is valid until six months after the close of the financial year or the date of the AGM, whichever is earlier.

These provisions prevent misleading information and protect the depositors, so the company must fulfil them.