Debenture Trustee plays a very important role in the NCD issue by safeguarding the interest of debenture holders and acting as an intermediary between the issuer company and the debenture holders.
Who can remove a debenture trustee before the expiry of his term?
(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. (iii) default in redemption of debentures.
What is the role of debentures trustees?
The debenture Trustee is a liaison between the issuer company and the debenture holders, for the purpose of securing the interest of the debenture-holders by holding the secured property on behalf of the issuer company that is mortgaged in favor of the debenture trustee.
Why is it compulsory to appoint a trustee in connection with the issuance of debentures?
Reason for the appointment of a Debenture Trustee
This means that the Debenture Holders can’t use such mortgaged property and they can benefit from it when the Debenture Trustee sells such property in order to redeem their debentures.
Why is debenture trustee required?
Duties of the Debenture Trustee include: (a) Call for periodical reports from the body corporate, i.e., issuer of debentures. (b) Take possession of trust property in accordance with the provisions of the trust deed. (c) Enforce security in the interest of the debenture holders.
What is debenture Trust Deed answer in one sentence?
(1) The agreement created by the company, whereby trustees are appointed to protect the interest of debenture – holders before they are offered for public subscription is known as Debenture Trust Deed.
Who appoints the debenture trustee?
5. Who appoints a debenture trustee? A debenture trustee is appointed by the issuer company. They are SEBI registered and regulated entities.
What is the purpose of a debenture?
Debentures. Debentures generally have a more specific purpose than other bonds. While both are used to raise capital, debentures typically are issued to raise capital to meet the expenses of an upcoming project or to pay for a planned expansion in business.
What is debenture with example?
A debenture is a bond issued with no collateral. Instead, investors rely upon the general creditworthiness and reputation of the issuing entity to obtain a return of their investment plus interest income. … Examples of debentures are Treasury bonds and Treasury bills.
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What are the advantages of debenture Trust Deed?
Your Trustee will deal with all creditor correspondence and queries. All interest and charges on the debts are frozen on the date the Trust Deed is signed. Once the Trust Deed has been given protected status, no further action can be taken against you by your creditors.
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.
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.
Does the company have to appoint a debenture trustee case study?
Yes. The company should appoint a Debentures trustee. This is because, in the above case, Rose Limited Company proposes to issue debenture to the public to raise funds. Thus, the company issuing debenture must appoint one or more debentures trustees.
What period should the debenture certificate be issued?
Debenture certificate should be issued within a period of six months, from the date of allotment of debentures.
What is debenture trustee deed?
Debenture Trust Deed means a deed executed by a company and trustees appointed by the deed in connection with the issue of debentures, together with any supplemental deed, resolution or scheme of arrangement modifying the terms thereof, and any deed substituted therefor, Sample 1.
What is debenture certificate?
Debenture Certificate is a document that certifies that the holder is the creditor of the company for the amount mentioned in the certificate. It is issued to all debenture holders. It is issued within a period of six months from the date of allotment of debentures.