Companies Act 1956: Debentures

Debentures are the loans taken by any company from the public hence debenture is a type of loan capital raised by any company. Debentures have the following features:

• Debenture holders do not have any voting rights.
• Debentures have a fixed rate of interest.
• Debenture Holders do not participate in management of company.
• Debenture Holders are not the owners of company.
• Debentures are of different types and depending upon their type company may issue debentures according to need.

Debenture Certificate:

Every company issuing debentures must issue debenture certificate within 3 months of the allotment of debentures, hence the debentures must be issued in the form of certificate after allotment. In this case if the company commits a default the company and its directors are liable to punishment which may be 2 years imprisonment or fine of Rs. 5000 per day of the default.

Debenture Redemption reserve:

It is a fund created by the company for redemption of debentures. According to the companies act and also according to the SEBI guidelines it is compulsory for the company to issue debentures and the company must create a DRR for the redemption of debentures.

Also Read:

• Companies Act 1956:
• Preliminary
• Promotion
• Incorporation
• Memorandum of Association
• Articles of Association
• Doctrines On Memorandum and Articles
• Alteration in Articles and Memorandum
• Prospectus
• Types of Prospectus
• Misstatement in prospectus
• Charge of the Company
• The Payment of Gratuity Act 197
• Employees Provident Fund and Miscellaneous Provisions Act 1952:
• Meaning, Contribution, Salary for Employees Provident Fund and Benefits and purpose of Employees Provident Fund.
• Applicability, Constitution of Central Board of Trustees and- Executive committee, Functions of Central Board of Trustees and Executive committee
• Pension Fund and Pension of Employees: Sec 6A
• Employee’s Deposit Link Insurance Scheme and Calculation of amount due from employer
• Authorizing employers to maintain provident fund account and Transfer of Accounts