to issue debentures and decide its type whether secured or unsecured and terms & conditions thereof. Offer letter for private placement in Form No. Written consent of a Debenture Trustee and appointment thereof (In case of secured debenture) Approval of Debenture Trustee Agreement (In case of secured debenture)

What does it mean to issue debentures?

Debentures are a type of Debt Instrument, similar to a Bond, that companies issue in order to raise capital. At the end of the lending period, issuing companies usually offer the choice of converting the Debentures into Shares. Debentures are not secured by physical assets or collateral.

Can one person company issue debentures?

Yes, but not in the form of shares. An OPC can raise fund for the company through debt like taking loans from the bank or any financial institutions or by issuing debentures or deposits. But OPC cannot issue debenture which is fully or partial convertible debenture.

Who can issue debenture?

Corporations and governments can issue debentures. Governments typically issue long-term bonds—those with maturities of longer than 10 years. Considered low-risk investments, these government bonds have the backing of the government issuer. Corporations also use debentures as long-term loans.

How much debentures can be issued?

A Company cannot issue debentures to more than 500 people without appointing a debenture trustee, whose duty would be to protect the interest of Debenture Holders and redress their grievances.

What are debentures risk factors?

Debentures also carry interest rate risk. 5 In this risk scenario, investors hold fixed-rate debts during times of rising market interest rates. These investors may find their debt returning less than what is available from other investments paying the current, higher, market rate.

What does it mean when a company issues a debenture?

If a company needs funds for extension and development purpose without increasing its share capital, it can borrow from the general public by issuing certificates for a fixed period of time and at a fixed rate of interest. Such a loan certificate is called a debenture.

Why are debentures a good way to raise money?

They are very crucial for raising long-term debt capital. A company can raise funds through the issue of debentures, which has a fixed rate of interest on it. The debenture issued by a company is an acknowledgment that the company has borrowed an amount of money from the public, which it promises to repay at a future date.

When do debentures have to be issued in India?

As per Section 56 (4) of the Companies Act, 2013 debenture certificate must be issued within a period of 6 months from the date of allotment. As per Section 56 (6) If a Company failed to issue Debenture Certificate withing prescribed time limit then it shall be made liable to pay a fine minimum of 25,000 rupees which may extend to 5,00,000 rupees.

What are the disadvantages of redeemable debentures?

With redeemable debenture, the company has to make provisions for repayment on the specified date, even during periods of financial strain on the company. Debenture put a permanent burden on the earnings of a company. Therefore, there is a greater risk when the earnings of the company fluctuate.