Issue of Debentures — Secretarial Practice STD 12 Commerce / Arts — Question

Name the type of security that Mr. Rohit will opt for.

What can be the maximum tenure of the debentures to be issued?

A Company has an export order which is to be completed by June 15. It feels it may fall short of funds (₹ 5,00,000) as all its investments are likely to mature after July 15. Question (a) Does it cancel the export order? Question (b) What financial arrangements are to be made if it has to complete the order? Question (c) What is the amount of interest it has to pay?

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 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:

Mr. Rohit, an individual investor, invests his own funds in the securities. He depends on investment income and does not want to take any risk. He is interested in the definite rate of income and safety of the principal.

Is the company financially sound?

Violet Ltd. Company plans to raise ₹ 10 crores by issuing debentures. The Board of Directors has some queries. Please advise them on the following:

Mr. Satish is a speculator. He desires to take advantage of the growing market for the company’s products and earn handsomely.

Can the company issue unsecured debentures?

A public limited company wants to invite depositor from the public at large as it neither wants to dilute its shareholdings nor at present want to use its reserves.Question (a) Does it require prior approval from shareholders? Question (b) What type of resolution does the company need to pass? Question (c) Is it necessary to file the resolution with the Registrar?