Q.What is a debenture trust deed? Explain the role of a debenture trustee.
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →An individual debenture-holder, especially one of many thousands subscribing to a public issue, is rarely in a position to personally monitor whether the issuing company continues to comply with the terms on which the debentures were issued, or whether the security backing them remains properly maintained. The Companies Act, 2013 addresses this practical difficulty by mandating a debenture trustee and a debenture trust deed for wider debenture offerings.
A debenture trust deed is the formal legal document, executed under Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014, between the company and the debenture trustee it has appointed. This deed sets out, in one place, the precise security created for the debentures (identifying the charged assets and the nature of the charge), the rate of interest and the redemption terms, the covenants the company undertakes to observe for the life of the issue, and the powers and duties given to the trustee to act on behalf of the debenture-holders as a class, rather than leaving each holder to negotiate or enforce terms individually. The deed must generally be executed within the time allowed under the Rules, counted from the closure of the issue. …
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.