(1) Debentures Trustee is a person or institution which protects the interest of the debenture holders. (2) A company which issues prospectus or invites more than 500 persons to buy its debentures has to appoint one or more Debentures Trustee. Companies issuing secured debentures also must appoint Debentures Trustee.
What is the function of debenture trustee?
The debenture Trustee is a liaison between the issuer company and the debenture holders, for the purpose of securing the interest of the debenture-holders by holding the secured property on behalf of the issuer company that is mortgaged in favor of the debenture trustee.
What is a debenture in corporate law?
Debentures are debt instruments used by an issuer to raise funds from investors in return for the payment of interest and are principally regulated under Chapter 2L of the Corporations Act 2001 (Corporations Act).
Who can be debenture trustee?
3. Who can be appointed a Debenture Trustee? To act as debenture trustee, the entity should either be a scheduled bank carrying on commercial activity, a public financial institution, an insurance company, or a body corporate. The entity should be registered with SEBI to act as a debenture trustee.
Why is debenture trustee appointed?
Debenture Trustee Role and Responsibilities To protect the interest of the debenture holders. To call for and keep a periodic check on the reports of the issuer company. To take possession of the trust property by provisions of the trust deed. To appoint a nominee director on the board of issuer entity when required.
What is debenture Trust Deed answer in one sentence?
(1) The agreement created by the company, whereby trustees are appointed to protect the interest of debenture – holders before they are offered for public subscription is known as Debenture Trust Deed.
Is a debenture a legal document?
a document, almost invariably by or on behalf of a company, that creates or acknowledges a debt owed by the company. Companies usually keep a register of debenture holders. It is a word without precise definite signification.
What does a debenture trustee do for a company?
A debenture trustee is a person or entity that serves as the holder of debenture stock for the benefit of another party. When a company is looking to raise capital, one method of accomplishing this is by issuing stock as a form of debt with the obligation to repay the debt at a specific interest rate.
Can a company appoint a creditor to a debenture?
No appointment for Creditor to the company. The vacancy of the debenture can be filled by the company by the consent of the other trustees. The trustee ensures that there is no breach in the terms of issue of debentures. The trustee can take steps to remedy the breach (above mentioned).
How does a company fill a vacancy in a debenture?
The vacancy of the debenture can be filled by the company by the consent of the other trustees. The trustee ensures that there is no breach in the terms of issue of debentures. The trustee can take steps to remedy the breach (above mentioned). The trustee is the person who informs the debenture holders about such breach.
Which is necessary for the protection of the interest of debenture holders?
(n) perform such acts as are necessary for the protection of the interest of the debenture holders and do all other acts as are necessary in order to resolve the grievances of the debenture holders.
