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Question
Study the following case/situation and express your opinion.
| Violet Ltd. company plans to raise 10 crores by issuing debentures. The Board of Directors has some queries. Please advise them on the following: |
- Can the company issue unsecured debentures?
- Can they issue irredeemable debentures?
- As the company is offering debentures to its members, can such debentures have normal voting rights?
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Solution
- Yes. The company can issue secured and unsecured debentures. But they have to get the approval of shareholders in a general meeting by passing a special resolution.
- No, All the debentures are redeemable i.e, have to be repaid. Thus, the company cannot issue irredeemable debentures.
- As per the Companies Act, 2013, the company cannot issue debentures with voting rights. Debenture holders are the creditors of the company. So, they don't have normal voting rights. They can vote only on matters related to them.
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RELATED QUESTIONS
Select the correct answer from the option given below and rewrite the statement:
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Study the following case/situation and express your opinion.
Rose limited company proposes to issue debenture to the public to raise funds. After discussions, the board of directors have decided to issue secured, redeemable, non-convertible debentures with a tenure of ten years. Please advise the board on the following matters:
Can the tenure of debentures be less than ten years?
Study the following case/situation and express your opinion.
DDS financial plans to raise 10 crores by issuing secured non-convertible debentures. However, as per the Articles of Association, the board of directors have authority only to raise up to 5 crores. They are also considering whether to go for private placement or make public offer. Please advise them on the following:
Within what period should company issue debenture certificate?
Explain briefly the procedure for issue of debentures.
Elaborate on the process for the issue of debentures.
