SPCC 3 Marks Each

Procedure for transfer of debenture is as under: (1) Specified form details: For registered debentures the debenture holders have to obtain form specified by the company and fill in the requisite details in the same. (2) Details of Buyer and Seller: Name and addresses of the seller and the purchaser of the debenture, details of debentures. Certificate serial numbers quantity of debentures and prices of debentures. Both parties are required to sign the form. (3) Signing document showing voluntarly sale of Debentures: The seller of the debenture has to declare that he is selling the debentures voluntarily and he has to sign it a second time. (4) Submission in registered office : The debenture transfer form along with debenture certificate is submitted at the registered office of the company. (5) Verifying details: The company secretary will examine the form and compare the signature with the specimen signature. (6) Stamp duty payment: It will be ensured whether the requisite stamp duty has been paid and endrosement will be done to that effect in the transfer register. (7) Resolution regarding transfer: A meeting of the Board of Directors is held to discuss the transfer of debentures and a resolution is passed for it. (8) Entering new name in the Certificate: On the basis of resolution of the Board of Director the company secretary enters the name of the purchaser or issues a new certificate and dispatches the same to the purchased.

Meaning of Debenture Trust : Debenture is a debt for the company. The company pledges its assets in favour of debenture holders against the debt raised. As per the Indian companies Act, a contract I agreement is exectued between the company and debenture holders and the said contract is registered with the Registrar of Companies. Thus, this contract agreement that lays down the conditions of debenture issue, is also known as Trust Deed! Trust Agreement. When a situation araises about the fixed or floating charge, the action is taken in accordance with the trust deed. Once a trust deed is registered with the Registrar, any amendment in the same can be made with the approval of the Debenture holders General Meeting. 2. Particulars included in Debenture Trust Deed: (1) Primary information of the company (2) Description of Debenture issue (3) Information of Security Assets mortgaged (4) Particulars of the appointment of Debentures Trustees (5) Events of Defaults (6) Obligations of Company (7) Miscellaneous (A) Amendmend made in any matter of Trust Deed (B) Company is liable for payment of stamp duty on Trust Deed (C) Provisions for meeting and resolutions of grievances, objections and resolution thereof.

The procedure for the issue of debenture is as under: (1) Resolution by Board of Directors : First of all, the provisions of debentures of the Articles of the company are studied, then a resolution is passed in the meeting of the board of directors to issue debentures. At the meeting a decision is taken regarding the amount of total issue, rate of interest, payment of interest, number of debenture certificates and conditions. (2) Resolution by General Meeting of the Company: The sanction for issue of debentures is obtained in the general meeting of the company. If due to issue of debentures the debt of company exceeds free reserves of the company or if the debentures are to be issued for an amount exceeding free reserve fund then the approval of members is obtained by convening the general meeting of members. (3) Permission of SEBI: It is necessary to ensure that the provisions of the companies Act and guidlines of SEBI are complied with and permission of SEBI is obtained. (4) To issue prospectus: Public limited companies invite general public to subscribe to the debenture by issuing prospectus which describes contents of debentures. Investors study it and take decision to purchase the debenture. (5) Appointment of Trustce for Debentures : In order to safeguard interests of debenture holders a trust deed, “Debenture Trust Deed”. is prepared under the Trust Act. The trustees for debentures are appointed in the company. (6) Agreement with underwriters : If the Board of Directors decides to enter into an agreement with underwriters for the issue of debentures, it is done at this stage. The conditions are determined for boih parties. (7) To open an account with a Scheduled bank: The company has to open an account with scheduled bank to receive applications and money for debenture. (8) Registration in Stock Exchange : If it is so stated in prospectus, the company has apply to a recognized stock exchange for the listing of debenture issue so that the debentures can be traded in the market. If the stock exchange refuses to register or cancels the registration of debenture issue, the company has to pay back the money to the debenture holders. (9) To Prepare Allotment Register for Debentures: After the closure of subscription, specified in the prospectus, the company secretary has to prepare a register on basis of application received. If decision regarding allotment of debentures is taken in the meeting of the Board of Directors. After deciding the allotment of debentures the process of remittance of debenture certificate is commenced. (10) Debenture Certificates: If the subscription to the debentures is to be made through part payment of debentures money, then after receiving the Ml amount towards the debenture alloted the company secretary prepares debenture certificates and in accordance with the provisions of the companies Act dispatches the certificate to debenture holders.

(1) Fully Convertible Debentures (FCD) : In accordance with the agreement with debenture holders, on completion on the specified time period these debentures are converted into equity shares. The company gives two options to holders (1) To redeem the debentures (2) To take equity shares of the same amount. If the debenture holder opts for fully convertible debentures then his rights as creditor come to an end and he gets rights as equity share holder. (2) Partly Convertible Debenture (PCD) : Here debentures are divided into two parts, where one part is fully convertible and the other part is non-convertible. Equity shares are issued against the convertible part while the non convertible part is reedemed. (1) Fully Convertible Debentures (FCD) : In accordance with the agreement with debenture holders, on completion on the specified time period these debentures are converted into equity shares. The company gives two options to holders (1) To redeem the debentures (2) To take equity shares of the same amount. If the debenture holder opts for fully convertible debentures then his rights as creditor come to an end and he gets rights as equity share holder. (2) Partly Convertible Debenture (PCD) : Here debentures are divided into two parts, where one part is fully convertible and the other part is non-convertible. Equity shares are issued against the convertible part while the non convertible part is reedemed.

Debenture is a document containing an acknowledgement of indebtedness; issued by the company under its common seal and giving an undertaking to repay the debt, at a specified rate or at the option of the company and in the meantime to pay interest, thereon at a fixed and at interval stated in debentures.