You are a company secretary in SOP Ltd. The company has borrowed secured loans through issue of debentures. The debenture trustee has been appointed for it by the company. The debenture trustee is seeking your assistance

CS Professional · Advanced Company Law and Practice · PYQS · December 2020
You are a company secretary in SOP Ltd. The company has borrowed secured loans through issue of debentures. The debenture trustee has been appointed for it by the company. The debenture trustee is seeking your assistance for the preparation of debenture trust deed. Explain the provisions of debenture trust deed.

Answer & Explanation:

Section 71 of the Companies Act, 2013 empowers the Central Government to prescribe the procedure, for securing the issue of debentures, the form of debenture trust deed, the procedure for the debenture-holders to inspect the trust deed and to obtain copies thereof, quantum of debenture redemption reserve required to be created and such other matters. Rule 18(5) of the Companies (Share Capital and Debentures) Rules, 2014 state that, a trust deed in Form No. SH-12 or as near thereto as possible shall be executed by the Company issuing debentures in favour of the debenture trustees. The Trust deed shall be executed within 3 months of closure of the issue or offer. The debenture trust deed shall, inter alia, contain the following: Description of Debenture Issue Details of Charge Created (in case of Secured Debentures) Particulars of the Appointment of Debenture Trustee(s) Events of Default Obligations of Company Miscellaneous 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. A copy of the trust deed shall be forwarded to any member or debenture holder of the company, at his request, within 7 days of the making thereof, on payment of fee.

Topics: Debentures

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