Company Law

Debentures [S. 71] {Please also refer Special measures incl. Key CoVID 19 effects}

1.

Convertible Debentures [Proviso to S. 71(1)]

Convertible Debentures can be issued only when Spl Reso is passed for the same in the GM

2.

Voting right
[S. 71(2)]

No Co shall issue debentures carrying voting right

3.

Secured Debentures
[S. 71(3)]

Secured Debentures can be issued by a Co subject to terms and conditions prescribed in R. 18(1)

e.g., appointment of the debenture trustee before the issue of prospectus/letter of offer for subscription of its debentures, execution of debenture trust deed not later than 60 days after the allotment of the debentures. Such issue of debentures shall be secured by the creation of a charge on the properties/assets of the Co/its Sub Cos/its Hold Co/its Asct Cos, having a value sufficient for the due repayment of the amount of debentures and interest thereon

4.

Tenure
[Proviso to S. 71(1)]

Date of Redemption of secured debentures issued by :

  • a Co engaged in the setting up of infrastructure projects
  • Infrastructure Finance Companies
  • Infrastructure Debt Fund
  • Co permitted by a Ministry/Department of CG or by RBI/NHB or by any other statutory authority ⟶

may >10 years but not > 30 years from the date of issue

any other Co ⟶

not >10 years from the date of issue

5.

Debenture Trustee

Conditions for appointment of Debenture Trustee are prescribed in R. 18(2)

6.

Debenture Redemption Reserve

Co shall create a DRR out of its profits available for payment of dividend as prescribed in R. 18(7)