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Compliance in Debenture/Bond Issue


Compliance in Debenture/Bond issues

As defined by Companies Act 2013, Debenture includes debenture stocks, bonds or any other debt instruments, which can either be unsecured or secured by constituting a charge on the assets of the Company. A company may issue these debt instruments on an agreement to repay it at a predetermined future date. The debenture holders earns interest at the end of every year till maturity.

E-tax Debenture Issue Services
  • Preparation of necessary documents for issuing of debentures
  • Drafting of documents required to call and hold the required meetings like notice of meetings, certified true copy of resolutions and declarations
  • Filing of ROC forms along with necessary documents for debenture issue
  • Issuance of certificate of debentures

Attributes of Debentures
  • Movable property that represents indebtedness of the company
  • No claim on ownership of the company
  • Not entitled with the administration and management of the company
  • Bears fixed rate of interest on the principal amount
  • No privilege to vote in any meeting of the company
  • No risk involved for loss of money of the debenture holders.
  • Right to claim the assets of the company at the time of liquidation

Kinds of Debentures

On the basis of different categories, Debentures are classified as follows:

  • Convertibility: Non-Convertible, Partly Convertible and Fully Convertible Debentures
  • Security: Secured and Unsecured Debentures
  • Redemption: Redeemable and Irredeemable Debentures
  • Registration: Registered and Bearer Debentures

Procedure to issue Debentures
  1. Preparation of Documents
    Creating necessary documents for issuing of debentures:
    • Debenture Subscription Agreement
    • Offer Letter for private placement in Form No. PAS – 4 and Application Forms
    • Records of a private placement offer in Form No. PAS – 5
    • Debenture Trustee Agreement
    • Mortgage Agreement for creation of charge on assets of the company

  2. Issue Notice and Hold Board Meeting
    Call and hold the Board meeting for following purposes:
    • Decide the type of debenture to be issued
    • Approve the offer letter for private placement in Form PAS – 4 and Application Forms
    • Approve the Process of Private Placement in Form No. PAS – 5
    • Appointment of a Debenture Trustee and sanction of the Debenture Trustee Agreement and
    • Approval of increase of borrowing powers, if required
    • Authorization for creation of charge on the assets of the company
    • Acceptance to the Debenture Subscription Agreement
    • To fix day, date and time for the EGM of shareholders

  3. Issue Notice and Hold Extraordinary General Meeting

    Company shall send notice of EGM along with explanatory statement to the members and thereafter hold the EGM to pass the necessary special resolutions

  4. File forms with ROC
    • File PAS – 4 and PAS – 5 in Form GNL – 2
    • File Offer Letter, Debenture Subscription Agreement, Debenture Trustee Agreement and so in in Form MGT – 14
    • File copy of Board resolutions, Special Resolutions in Form MGT – 14
    • File Form PAS – 3 related to allocation of debentures
    • File Form CHG – 9 for the creation of charge on assets

  5. Certificate of Debenture

    Company must prepare and issue certificate of debenture within a period of 6 months

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