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Question
Study the following case/situation and express your opinion.
| DDS Financial plans to raise ₹10 crores by issuing Secured, Non-convertible debentures. However, as per the Articles of Association, the Board of Directors has the authority only to raise up to 5 crores. They are also considering whether to go for a private placement or make a public offer. Please advise them on the following: |
- What can be the maximum tenure of the debentures to be issued?
- Is the proposed issue within the borrowing powers of the Board?
- Within what period should the company issue a Debenture certificate?
Solution
- The maximum tenure of the debentures to be issued is of 10 years. Only certain companies permitted by the Ministry of Corporate Affairs, Central Government, or RBI can issue debentures beyond a period of 10 years but not exceeding 30 years.
- No. The proposed issue is not within the borrowing powers of the board. The board can use its borrowing power up to the limit permitted by the Articles of Associations. In case, the Board wants to increase its borrowing power, they have to get approval from shareholders by passing a special resolution in a general meeting.
- A debenture certificate is a document issued by a company as evidence of debts to the holder. As per the Companies Act, 2013, the company has to issue a debenture certificate within 6 months of the allotment of debentures.
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RELATED QUESTIONS
A company cannot issue _____________ with voting rights
Select the correct answer from the option given below and rewrite the statement:
The details of allotment of Debentures must be entered in ___________.
Select the correct answer from the option given below and rewrite the statement:
Procedure for allotment of Debenture should be completed within ___________ from the date of receipt of applications.
Write a word or a term or a phrase which can substitute the following statement.
Authority which has power to issue debentures.
State whether the following statement is or false.
Debenture trustees are appointed to protect the interest of shareholders.
State whether the following statement is or false.
Company has to create a charge on its assets when it issues secured debentures.
State whether the following statement is true or false.
After allotment of Debentures, names of Debenture holders are entered in the Register of Members.
Find the odd one.
Complete the sentence.
To stop a company from incurring further liabilities, the Debenture trustee can approach ____________.
Complete the sentence.
Return on investment on debenture is called ________.
Complete the sentence.
For public issue of debentures of ₹100 crores, minimum subscription should be ______.
Answer in one sentence:
Whom does the company appoint to protect the interest of debenture holders?
Answer in one sentence:
What is the minimum subscription that a company must collect for an issue of debentures of 100 crores?
Correct the underlined word and rewrite the following sentence:
Return on investment on debenture is dividend.
Correct the underlined word and rewrite the following sentence:
Procedure for allotment of debentures should be completed within 90 days from date of receipt of application.
Arrange in proper order.
- Issue debenture certificate
- Issue prospectus
- Open bank Account
Arrange in proper order.
a. Hold Board Meeting for allotment
b. Issue debenture certificate
c. Receive application with money
Study the following case/situation and express your opinion.
| Violet Ltd. company plans to raise 10 crores by issuing debentures. The Board of Directors has some queries. Please advise them on the following: |
- Can the company issue unsecured debentures?
- Can they issue irredeemable debentures?
- As the company is offering debentures to its members, can such debentures have normal voting rights?
