Question

Q.3 Study the following case / situation and express your opinion.
1. 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 following
matters :
a. Should the company appoint Debenture trustee ?
b. Should the company create a charge on its assets ?
c. Can the tenure of debentures be less than ten years ?
2. Violet Ltd. company plans to raise * 10 crores by issuing debentures. The Board of
Directors have some queries. Please advise them on the following –
a. Can the company issue unsecured debentures?
b. Can they issue irredeemable debentures?
c. As the company is offering debentures to its members, can such debentures have normal
voting rights ?
3. 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 upto 5 crores. They are also considering whether to go for private placement or
make public offer. Please advise them on the following
a. What can be the maximum tenure of the debentures to be issued ?
b. Is the proposed issue within the borrowing powers of the board ?
c. Within what period should company issue Debenture certificate ?​

Answer 1

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