Explain the following: (iv) Elements of Debenture Trust Deed.

Companies in the course of their normal business borrow funds by various modes, one such mode being the issue of debentures. An issue of debentures is usually secured by a trust deed, where under movable and immovable properties of the company are mortgaged in favour of the trustees for the benefit of the debenture holders. The elements of debenture trust deeds are as follows: The trust deed usually gives a legal mortgage on block capital and a floating security on the other assets of the company in favour of the trustee on behalf of the debenture holders. The trust deed gives in detail the conditions under which the loan is advanced. The trust deed should specify in some detail the remuneration payable to the trustee, their duties and responsibilities in relation to the trust property. It also gives in detail, rights of debenture holders to be exercised through the trustees in case of default by the company in payment of interest and principal as agreed upon.