Maharashtra State BoardHSC Commerce 12th Board Exam
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Justify the following statement:A company has to create charge on its assets for issuing secured debentures. - Secretarial Practice

Short Note

Justify the following statement:
A company has to create charge on its assets for issuing secured debentures.

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Solution

Justification: 
(1) Debentures Trustee is a person or institution which protects the interest of the debenture holders. The Trustees become the custodian of the assets on which charge has been created.
(2) A company which issues prospectus or invites more than 500 persons to buy its debentures has to appoint one or more Debentures Trustee. Companies issuing secured debentures also must appoint Debentures Trustee.
(3) Debentures Trustee is appointed before prospectus or letter of offer/offer letter is issued or within 60 days after the allotment of the debenture. The Trustees must give written consent to act as Debenture Trustees.
(4) Thus, it is rightly justified that, debentures trustee is appointed by a company issuing debentures.

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APPEARS IN

Balbharati Secretarial Practice 12th Standard HSC Maharashtra State Board
Chapter 4 Issue of Debentures
Exercise Q.5 | Q 2 | Page 79
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