Quick Answer: Can A Trust Issue Debentures?

What is difference between bond and debenture?

In a sense, all debentures are bonds, but not all bonds are debentures.

Whenever a bond is unsecured, it can be referred to as a debenture.

To complicate matters, this is the American definition of a debenture.

In British usage, a debenture is a bond that is secured by company assets..

Can debentures be issued without interest?

Zero Rates of Interest Debentures: Company can issue this type of debenture, Rate of interest in these debentures will be zero. … As stated in section 71(4) the company shall create a debenture redemption reserve account out of the profits of the company available for payment of dividend.

What are the types of debentures?

Types of Debentures: 7 Major Types of DebenturesDebentures may be of the following kinds: ADVERTISEMENTS:i. Registered Debentures: … ii. Bearer Debentures: … iii. Redeemable Debentures: … iv. Perpetual or Irredeemable Debentures: … v. Secured Debentures: … vi. Naked Debentures: … vii. Debentures Issued as Collateral Security for a Loan:More items…

What is Debenture Trust?

A Debenture Trust Deed is a document created by a company as security that is issued by the company to protect the interest of a denture holder, where trustees are appointed. In order to raise funds from the general public, companies can create security in the form of shares known as debenture stock.

What is issuing authority issues in debentures?

Prepare and File Documents GNL – 2 with the Registrar of Companies (ROC). File Offer Letter in Form No. MGT – 14 with the Registrar of the Companies (ROC). File copy of Board resolutions, Special Resolution, Debenture Subscription Agreement, Debenture Trustee Agreement and so on Form No.

Who is a debenture holder?

A person having the debentures is called debenture holder whereas a person holding the shares is called shareholder. … A shareholder or member is the joint owner of a company; but a debenture holder is only a creditor of the company. Shareholders are invited to attend the annual general meeting of the company.

Why is Debenture Trustee required?

The concept of debenture trustees was evolved due to the difficulties being faced by an issuer company while dealing with each debenture holder separately for obtaining their consent on various matters and carrying out compliances, when the debentures were issued to multiple debenture holders.

What is Debenture 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.

Who can issue a debenture?

Corporations and governments can issue debentures. Governments typically issue long-term bonds—those with maturities of longer than 10 years. Considered low-risk investments, these government bonds have the backing of the government issuer. Corporations also use debentures as long-term loans.

Why do companies issue debentures?

Why do company issue debentures, when they can borrow money from Bank. … ex- borrowed fund can be used only for capital expenditure or they limit companies ability to raise additional funds till this loan is repaid. etc. Thus most companies in order to avoid this go for loan from general public i.e Debenture.

Is debenture a current liability?

Noncurrent liabilities include debentures, long-term loans, bonds payable, deferred tax liabilities, long-term lease obligations, and pension benefit obligations. The portion of a bond liability that will not be paid within the upcoming year is classified as a noncurrent liability.

Can a company issue unsecured debentures?

Yes, private companies can issue NCD of both types (secured and unsecured), however, they cannot issue debentures carrying voting rights. If the private company is issuing secured NCDs, it must fulfill the criteria prescribed by SEBI for issuing such an instrument.