Quick Answer: Can Company Issue Irredeemable Debentures?

How do you increase debentures?

Procedure to Issue DebenturesOffer letter for private placement in Form No.

Approval of Form No.

Sanction of Debenture Trustee Agreement and appointment of a Debenture Trustee.Appointment of an expert for approval of increase of borrowing powers, if required.More items….

How do companies issue debentures?

Procedure for issue of debentures:Hold a board meeting to decide the type of debenture to be issued by the company. … At the time of the appointment of SEBI registered Debenture Trustee, consent shall be obtained from the Trustee, who is considered to be appointed.More items…•

What is issuing authority issue debenture?

(13) The Central Government may prescribe the procedure, for securing the issue of debentures, the form of debenture trust deed, the procedure for the debenture-holders to inspect the trust deed and to obtain copies thereof, quantum of debenture redemption reserve required to be created and such other matters.

What do you mean by bearer debentures?

A bearer debenture is an unregistered unsecured bond. The issuing corporation does not keep a record of the purchaser’s name, nor is the owner’s name listed on the debenture. The owner cannot get a replacement debenture if the original one is lost or stolen.

Who is a debenture holder?

A debenture is a way that larger, public limited companies might borrow money at a fixed rate of interest. The company borrows money from the lender, who’s then called a “debenture holder”. … Unlike shareholders, debenture holders can’t vote at companies’ general meetings.

What is an irredeemable debenture?

How do irredeemable debentures work? In simple terms, an irredeemable debenture is an agreement made between the lender and the borrower, usually with a favourable interest rate. In the case of a company becoming insolvent, the debenture ensures that the lender is first to receive their funds.

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.

Are debentures transferable?

Debentures are freely transferable by the debenture holder. Debenture holders have no rights to vote in the company’s general meetings of shareholders, but they may have separate meetings or votes e.g. on changes to the rights attached to the debentures.

What is difference between bond and debenture?

Generally, the lender also receives a fixed rate of interest during the duration of the bond’s term. Debentures, on the other hand, are unsecured debt instruments that are not backed by any collateral. Rather, the good credit ratings of a company issuing a debenture act as the underlying security.

What is the difference between redeemable and irredeemable debentures?

Redeemable debentures carry a specific date of redemption on the certificate. The company is legally bound to repay the principal amount to the debenture holders on that date. On the other hand, irredeemable debentures, also known as perpetual debentures, do not carry any date of redemption.

What are the two types of debenture?

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.

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. noun.

What is the difference between share and debenture?

One difference between share and debentures is that debentures become borrowed capital for the company. It is like a loan that a company has taken from the debenture holders which is supposed to pay back with interest in due time. … However, unlike shareholders, debenture holders do not get voting rights.

Who can issue convertible debentures?

As per Section 71 of the companies Act, 2013, the debentures can be issued by the company which is partially, completely convertible or redeemable but it cannot have voting rights.

Which company can issue debentures?

Provided that an Infrastructure finance companies, Companies engaged in Infrastructure projects, Infrastructure Debt Fund Non-Banking Financial Companies and Companies permitted by Ministry or Department of Central Government or by RBI can issue Debenture beyond a period of 10 years but up to 30 years.