Regulation 30 - Debenture trustees - International Financial Services Centres Authority (Capital Market Intermediaries) Regulations, 2025

30. Debenture trustees (1) A registered debenture trustee shall enter into an agreement with the issuer before the opening of the subscription list for issue of debentures. (2) A person shall not be appointed as a debenture trustee, in cases where the debenture trustee is an associate of the issuer or is likely to have conflict of interest in any manner. (3) A registered debenture trustee shall ensure that: (a) It accepts the trust deed which shall contain details on standard information pertaining to the debt issue and details specific to the particular debt issue and shall not contain covenants prejudicial to the interest of the debenture holders; (b) The trust deed is consistent with the terms of the proposed issue of debentures; (c) It calls for periodical reports/ performance report from the issuer company within seven days of the relevant board meeting or within forty five days of the respective quarter whichever is earlier; (d) It calls for reports on the utilization of funds raised by the issue of debentures; (e) It communicates to the debenture holder defaults, if any, in respect of the payment of interest or redemption of debentures and actions taken thereunder; (f) It appoints a nominee director on the board of the issuer in the event of two consecutive defaults in payment of interest or default in creation of security or default in redemption of debentures; and the issuer shall be obliged to provide all requisite support in this regard, if legally permissible; (g) In case of breach of terms of the issue of debentures or covenants of the trust deed, it shall take reasonable steps to remedy such breach and inform the debenture holders immediately of any such breach; (h) The issuer satisfies the conditions, if any, regarding creation of security for the debentures, debenture redemption reserve and recovery expense fund; (i) The assets of the issuer and of the guarantors are sufficient to discharge the interest and principal amount at all times and such assets are free from any other encumbrances except those which are specifically agreed to by the debenture holders; (j) It shall perform all acts necessary for the enforcement of the security and for protection of the interest of the debenture holders; (k) It shall call for reports on the utilization of funds raised by the issue of debentures; (l) It takes steps to convene a meeting of debenture holders as and when required; (m) The debentures have been converted or redeemed in accordance with the terms of the issue of debentures; (n) It takes possession of the trust property in accordance with the terms of the trust deed; (o) The debentures have been credited in the demat accounts of the debenture holders; (p) Debenture holders have been paid the interest due on the debentures and the monies due to them on the date of redemption of the debenture; (q) It informs the Authority immediately of any breach of trust deed or provision of any applicable laws; (r) It obtains reports from the lead bank regarding the progress of the project; and (s) It may inspect books of account, record, registers of the issuer and trust property to the extent necessary for discharging its obligations. (4) Before creating a charge on the security for the debentures, the debenture trustee shall exercise independent due diligence to ensure that such security is free from any encumbrance or that it has obtained the necessary consent from other charge-holders if the security has an existing charge, in the manner as may be specified by the Authority from time to time. (5) No debenture trustee shall relinquish its assignment as debenture trustee in respect of the debenture issue of any issuer, unless and until another debenture trustee is appointed in its place by the issuer.