TMI BlogDebenturesX X X X Extracts X X X X X X X X Extracts X X X X ..... nk of India or by the National Housing Bank or by any other statutory authority to issue debentures for a period exceeding ten years.]] 8 [ (b) Such an issue of debentures shall be secured by the creation of a charge on the properties or assets of the company or its subsidiaries or its holding company or its associates companies, having a value which is sufficient for the due repayment of the amount of debentures and interest thereon.] (c) the company shall appoint a debenture trustee before the issue of prospectus or letter of offer for subscription of its debentures and not later than sixty days after the allotment of the debentures, execute a debenture trust deed to protect the interest of the debenture holders ; and (d) the security for the debentures by way of a charge or mortgage shall be created in favour of the debenture trustee on- 9 [ (i) any specific movable property of the company or its holding company or subsidiaries or associate companies or otherwise. ] (ii) any specific immovable property wherever situate, or any interest therein: Provided that in case of a non-banking financial company, the charge or mortgage under sub-clause (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nel (d) the Board may fill any casual vacancy in the office of the trustee but while any such vacancy continues, the remaining trustee or trustees, if any, may act: Provided that where such vacancy is caused by the resignation of the debenture trustee, the vacancy shall only be filled with the written consent of the majority of the debenture holders. (e) any debenture trustee may be removed from office before the expiry of his term only if it is approved by the holders of not less than three fourth in value of the debentures outstanding, at their meeting. (3) It shall be the duty of every debenture trustee to- (a) satisfy himself that the letter of offer does not contain any matter which is inconsistent with the terms of the issue of debentures or with the trust deed; (b) satisfy himself that the covenants in the trust deed are not prejudicial to the interest of the debenture holders; (c) call for periodical status or performance reports from the company; (d) communicate promptly to the debenture holders defaults, if any, with regard to payment of interest or redemption of debentures and action taken by the trustee therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months of closure of the issue or offer]. (6) The provisions of sub-rules (2) to (5) of rule 18 shall not be applicable to the public offer of debentures. 13 [ (7) The company shall comply with the requirements with regard to Debenture Redemption Reserve (DRR) and investment or deposit of sum in respect of debentures maturing during the year ending on the 31 st day of March of next year, in accordance with the conditions given below:- (a) Debenture Redemption Reserve shall be created out of profits of the company available for payment of dividend; (b) the limits with respect to adequacy of Debenture Redemption Reserve and investment or deposits, as the case may be, shall be as under;- (i) Debenture Redemption Reserve is not required for debentures issued by All India Financial Institutions regulated by Reserve Bank of India and Banking Companies for both public as well as privately placed debentures; (ii) For other Financial Institutions within the meaning of clause (72) of section 2 of the Companies Act, 2013, Debenture Redemption Reserve shall be as applicable to Non -Banking Finance Companies registered with Reserve Bank of India. (iii) For listed compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited as above shall not be used for any purpose other than for redemption of debentures maturing during the year referred above. (c) in case of partly convertible debentures, Debenture Redemption Reserve shall be created in respect of non-convertible portion of debenture issue in accordance with this sub-rule. (d) the amount credited to Debenture Redemption Reserve shall not be utilized by the company except for the purpose of redemption of debentures. ] (8) (a) A trust deed for securing any issue of debentures shall be open for inspection to any member or debenture holder of the company, in the same manner, to the same extent and on the payment of the same fees, as if it were the register of members of the company; and (b) A copy of the trust deed shall be forwarded to any member or debenture holder of the company, at his request, within seven days of the making thereof, on payment of fee. 6 [(9) Nothing contained in this rule shall apply to any amount received by a company against issue of commercial paper or any other similar instrument issued in accordance with the guidelines or regulations or notification issued by the Reserve Bank of India. (10) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Substituted vide F. No. 01/04/2013 CL-V (part-II) - Dated 19-7-2016 before it was read as, of the value of debentures 11. Inserted vide F. No. 01/04/2013 CL-V (part-II) - Dated 19-7-2016 12. Inserted vide G.S.R. 791(E) - Dated 12-8-2016 13. Substituted vide NOTIFICATION No. [F.No. 01/04/2013-CL-V- Part-Ill] dated 16-08-2019 before it was read as (7) The company shall create a Debenture Redemption Reserve for the purpose of redemption of debentures, in accordance with the conditions given below- (a) the Debenture Redemption Reserve shall be created out of the profits of the company available for payment of dividend; (b) the company shall create Debenture Redemption Reserve equivalent to at least fifty percent of the amount raised through the debenture issue before debenture redemption commences. (i) No DRR is required for debentures issued by All India Financial Institutions (AIFIs) regulated by Reserve Bank of India and Banking Companies for both public as well as privately placed debentures. For other Financial Institutions (FIs) within the meaning of clause (72) of section 2 of the Companies Act, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be, shall not at any time fall below fifteen percent of the amount of the debentures maturing during the year ending on the 31st day of March of that year; (d) in case of partly convertible debentures, Debenture Redemption Reserve shall be created in respect of non-convertible portion of debenture issue in accordance with this sub-rule. (e) the amount credited to the Debenture Redemption Reserve shall not be utilised by the company except for the purpose of redemption of debentures. 14. Substituted vide Notification No. F. No. 01/04/2013-CL-V- Part-IV dated 05-06-2020 before it was read as (v) In case a company is covered in item (A) or item (B) of sub-clause (iii) of clause (b) or item (B) of sub-clause (iv) of clause (b), it shall on or before the 30 th day of April in each year, in respect of debentures issued by a company covered in item (A) or item (B) of sub-clause (iii) of clause (b) or item (B) of sub-clause (iv) of clause (b), invest or deposit, as the case may be, a sum which shall not be less than fifteen per cent. , of the amount of its debentures maturing during the year, ending on the 31 st day of March of the next year in any one or mor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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