Question

What statutory requirements apply to the public issue of debentures?    

Answer 1

The following conditions must be satisfied for issuing a debentures ;

• No company will issue any debentures that carry any voting rights.

• No company will issue a prospectus or make an offer or invitation to the public or to its members in excess of five hundred for the subscription of its debentures, unless the company has, previous to such issue or offer, selected one or more debenture trustees and the prescribed conditions that govern the appointment of such trustees.

• An issue of debenture for more than 500 members or any number of public that is subject to clarification from government without the creation of a debenture trust is forbidden.

• A debenture trustee will take steps to protect the interests of the debenture holders and remedy their grievances.

•Any provision of trust deed or contract that is protected by trust deed, exempting a trustee or indemnifying him against any liability for violation of trust will be void.