Question

What is the maximum limit of debentures which companies, other than banking companies and All India Financial Institutions, can redeem out of capital?

Answer 1

1. It is not necessary for listed corporations to establish a debenture redemption reserve. They can therefore use their capital to redeem all of the debentures.
2. Out of their distributable profits, unlisted firms must establish a debenture redemption reserve equivalent to at least 10% of their outstanding debentures. They can therefore use their capital to redeem 90% of their debentures.