Bright Ltd. wants to go for public issue of secured debentures for which the company issues prospectus. In light of the provisions of the Companies Act, 2013: (b) In what way does the Act and the rules thereof regulate t

Appointment of Debenture Trustee Section 71(5), specifies that no company shall issue a prospectus or make an offer or invitation to the public or to its members exceeding 500 for the subscription of its debentures, unless the company has, before such issue or offer, appointed one or more debenture trustees. Further, Rule 18 specifies that for secured debentures issued by any type of company, 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 60 days after the allotment of the debentures. The conditions governing the appointment of debenture trustees through which the appointment of the debenture trustee is being regulated under sub-section (5) of section 71 of the Companies Act, 2013 are prescribed under Rule 18(2) of the Companies (Share Capital and Debentures) Rules, 2014, which reads as under: (A) The names of the debenture trustees shall be stated in letter of offer inviting subscription for debentures and also in all the subsequent notices or other communications sent to the debenture holders; (B) Before the appointment of debenture trustee or trustees, a written consent shall be obtained from such debenture trustee or trustees proposed to be appointed and a statement to that effect shall appear in the letter of offer issued for inviting the subscription of the debentures; (C) A person shall not be appointed as a debenture trustee, if he- beneficially holds shares in the company; is a promoter, director or key managerial personnel or any other officer or an employee of the company or its holding, subsidiary or associate company; is beneficially entitled to moneys which are to be paid by the company otherwise than as remuneration payable to the debenture trustee; is indebted to the company, or its subsidiary or its holding or associate company or a subsidiary of such holding company; has furnished any guarantee in respect of the principal debts secured by the debentures or interest thereon; has any pecuniary relationship with the company amounting to two per cent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year; is relative of any promoter or any person who is in the employment of the company as a director or key managerial personnel (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.