Quick Answer: Who Can Become Debenture Trustee?

Who is a debenture trustee?

Debenture trustee is a person who safeguards the interest of debenture holders and serves as a liaison between the issuer company and the debenture holders.

Issue of unlisted secured debentures on private placement basis to selected group of persons; and..

Who can be a debenture holder?

Debenture holders or bondholders are the persons, firms or companies who purchase the debentures of other company. If they give debt to govt. by buying bond, they will be bondholders. Debenture holders can not vote in annual general meeting but they have only right to get fixed interest on their given debt or loan.

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.

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. … 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.

Can unsecured debentures be issued by a private company?

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.

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

Yes. Pursuant to Section 71 of the Companies Act, 2013, a Private Limited Company can issue unsecured debentures with an option to convert such debentures into shares, either in whole or in part at the time of redemption.

What are the different 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 simple words?

A debenture is a type of debt instrument that is not backed by any collateral and usually has a term greater than 10 years. Debentures are backed only by the creditworthiness and reputation of the issuer. Both corporations and governments frequently issue debentures to raise capital or funds.

Is a debenture an asset?

Rather than an instrument that’s used to secure a loan against company assets, a debenture in the USA is an unsecured corporate bond that companies can issue as a means of raising capital.

What is a debenture certificate?

Debentures are instruments of debt, which means that debenture holders become creditors of the company. They are a certificate of debt, with the date of redemption and amount of repayment mentioned on it. This certificate is issued under the company seal and is known as a Debenture Deed.

What are the two types of debenture?

Types of DebenturesRedeemable and Irredeemable (Perpetual) Debentures.Convertible and Non-Convertible Debentures.Fully and Partly Convertible Debentures.Secured (Mortgage) and Unsecured (Naked) Debentures.First Mortgaged and Second Mortgaged Debentures.Registered Unregistered Debentures (Bearer) Debenture.More items…•

How many debentures can be issued?

A company cannot issue debentures to more than 500 people without appointing a debenture trustee, whose duty would be to protect the interest of Debenture Holders and redress their grievances.

What are the disadvantages of debentures?

Disadvantages of DebenturesEach company has certain borrowing capacity. … With redeemable debenture, the company has to make provisions for repayment on the specified date, even during periods of financial strain on the company.Debenture put a permanent burden on the earnings of a company.

What are the characteristics of debenture?

Characteristics of Debenture1.1 Written promise.1.2 Company Seal.1.3 Borrowed Funds.1.4 Maturity Period.1.5 Claim in Income.1.6 Priority Claim on Assets.1.7 No Controlling Power.1.8 Fixed Rate of Interest.More items…•

Why do companies issue debentures?

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.