Question: Who Can Issue A Debenture?

Can private company issue debentures?

(b) Under Section 3(1)(d) of the Act, a Private Company is prohibited from accepting Deposit from persons other than its Directors, Members and their relatives.

(c) Hence, the Private Company must issue Debentures only as a Secured Debenture..

Can a company issue irredeemable debentures?

Irredeemable Debentures: Irredeemable debentures are also known as Perpetual Debentures because the company does not give any undertaking for the repayment of money borrowed by issuing such debentures. These debentures are repayable on the winding-up of acompany or on the expiry of a long period.

Can a trust issue debentures?

Any provision contained in a trust deed for securing the issue of debentures, or in any contract with the debenture-holders secured by a trust deed, shall be void in so far as it would have the effect of exempting a trustee thereof from, or indemnifying him against, any liability for breach of trust, where he fails to …

What is Debenture simple words?

A debenture is a type of bond or other debt instrument that is unsecured by collateral. Since debentures have no collateral backing, debentures must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds.

Can banks issue debentures?

Debentures are commonly used by traditional lenders, such as banks, when providing high-value funding to larger companies. To register a debenture, a lender simply has to file it with Companies House. This can usually be done in a matter of days.

Who is not eligible for appointed as debenture trustee?

Appointment of debenture trustee Not mandatory, if debentures are issued to less than 50 persons or members not exceeding 500. Debatable issue. However, in our view, the appointment of a debenture trustee does not seem to be mandatory unless debentures are issued to more than 50 persons or members exceeding 500.

Is appointment of debenture trustee compulsory?

As per the provisions of companies act, appointment of debenture trustee is mandatory. However, issue of debentures / bonds with maturity of 18 months or less are exempt from the requirement of appointment of Trustee.

Why is Debenture Trustee required?

A debenture trustee has various duties to perform viz. To ensure there is no breach in terms of the issue of debentures. To ensure that all conditions regarding the creation of debentures are met. To take the required steps to meet debenture holder obligations in case of a breach.

Can a private company issue unsecured debentures under Companies Act 2013?

Section 71: – A Company may issue debentures with an option to convert into shares, wholly or partly, at the time of redemption but cannot issue debentures with voting rights. … If there is any default with the provisions of this section then the Company and the Officers shall be liable to fine or imprisonment or both.

Is a debenture an asset?

The debenture is sometimes called a ‘floating charge debenture’ and includes all company assets. … The debenture secures the assets for the lender should the company fail and in liquidation, the charge becomes ‘fixed’ on the asset’s value at that point in time.

What is debenture and its types?

Debentures are a debt instrument used by companies and government to issue the loan. … Companies use debentures when they need to borrow the money at a fixed rate of interest for its expansion. Secured and Unsecured, Registered and Bearer, Convertible and Non-Convertible, First and Second are four types of Debentures.

Why debentures are issued?

Why do company issue debentures, when they can borrow money from Bank. Debentures are loan which company borrow’s from general public . … ex- borrowed fund can be used only for capital expenditure or they limit companies ability to raise additional funds till this loan is repaid.

Can one person company issue debentures?

The private company is in an advantageous position as it can issue debentures and accept deposits from the public. 3. Even though the idea of OPC is to enable an individual to start his own business without the need to have a partner but, procedurally a suitable nominee has to be selected.

What is Debenture with example?

The definition of a debenture is a long-term bond issued by a company, or an unsecured loan that a company issues without a pledge of assets. An interest-bearing bond issued by a power company is an example of a debenture.

What is a specific debenture?

A fixed debenture, also known as a fixed charge debenture, is a debt that’s issued against specific assets. A fixed debenture typically carries a fixed rate of interest for the loan. … Companies sign over specific assets, such as real estate or equipment, to the creditor as collateral for the loan.