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Question
Study the following case/situation and express your opinion.
| Rose limited company proposes to issue debentures to the public to raise funds. After discussions, the board of directors has decided to issue secured, redeemable, non-convertible debentures with a tenure of ten years. Please advise the board on the following matters: |
- Should the company appoint a debentures trustee?
- Should the company create a charge on its assets?
- Can the tenure of debentures be less than ten years?
Solution
- Yes. The company should appoint a Debentures trustee. This is because, in the above case, Rose Limited Company proposes to issue debentures to the public to raise funds. Thus, the company issuing debentures must appoint one or more debentures trustees.
- Yes. The company should create a charge on tangible assets. The charge is created in the favour of the Debenture Trustee and they become the custodian of the assets on which the charge has been created.
- Secured debentures can be redeemed for a maximum of 10 years. Less than ten years is possible. It demonstrates a company's strong liquidity position.
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RELATED QUESTIONS
Select the correct answer from the option given below and rewrite the statement:
A company which issues prospectus or invites more than 500 persons to buy its debenture has to appoint ____________.
Write a word or a term or a phrase which can substitute the following
statement.
Institution which redresses grievances of debenture holders.
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Complete the sentence.
Authority to create charge on company’s assets is with the ______.
Complete the sentence.
A company which issues prospectus or invites more than 500 persons to subscribe for its debentures, has to appoint _______________.
Answer in one sentence:
Name the document which is an agreement between the debenture trustee and company?
Correct the underlined word and rewrite the following sentence:
The details of debenture holders are entered in Register of Members.
Correct the underlined word and rewrite the following sentence:
A company issuing irredeemable debentures must create a charge on the assets of the company.
Explain the following term/concept.
Debenture Certificate
Explain the following term/concept.
Debentures Trustee.
Explain the following term/concept.
Charge on assets.
Explain the following term/concept.
Debenture Trust Deed.
Study the following case/situation and express your opinion.
Rose limited company proposes to issue debenture to the public to raise funds. After discussions, the board of directors have decided to issue secured, redeemable, non-convertible debentures with a tenure of ten years. Please advise the board on the following matters:
Should the company create a charge on its assets?
Give one word or phrase for the following sentence:
The company enters into a contract with one or more debenture trustees.
Give one word or phrase for the following sentence:
What are debenture trustees?
