Under Section 71 of the Companies Act, 2013 in relation to issue of debentures: The provisions are as follows: (1) Issue of debentures- A company may issue debentures in which at the time of redemption, the option of converting shares into full or part Yes, but for this it is necessary that it is approved by a special resolution in the General Assembly.
(2) No voting rights – No company shall sell debentures having any voting rights.
(3) Secured debentures- A company cannot issue secured loans with the conditions and conditions prescribed. can be issued.
(4) Debenture Redemption Fund – Where debentures are issued by a company under this section, the company shall create a debenture solvency fund. This fund shall be made out of the profits of the company available for payment of dividend. This amount will not be used for any other purpose other than for the redemption of debentures.
(5) Appointment of debenture trustees No company shall issue prospectus or invite more than five hundred members to subscribe to its debentures, unless the company has appointed one or more trustees before such issue or offer. and the conditions governing the appointment of such trustees shall be such as may be prescribed.
(6) Compliance with the terms of issue The company shall pay interest on debentures and liquidate them in accordance with the terms of their issue.
As per Rule 4.16 of the Companies Act, 2013, in case of issue of secured debentures, the period of solvency thereof shall not exceed 10 years from the date of issue but in case of companies engaged in infrastructure, this period may exceed 10 years, but 30 not more than a year.