09 June 2015
Thank u sir for this information but if u don't mind sir please can u guide me about the procedure for issue (Specially unsecured Debentures).
02 August 2024
Issuing unsecured debentures involves a process governed by regulations under the Companies Act, 2013, and guidelines issued by the Securities and Exchange Board of India (SEBI) if the debentures are to be listed on a stock exchange. Here is a step-by-step guide to the procedure:
### **1. Board Approval**
**a. Convene a Board Meeting:** - The company’s Board of Directors must approve the issuance of unsecured debentures. - Pass a resolution detailing the terms and conditions of the debentures, including the amount, interest rate, maturity period, and other relevant terms.
**b. Draft a Proposal:** - Prepare a detailed proposal outlining the purpose of the issuance, terms of the debentures, and the financial impact.
### **2. Draft and Finalize Documents**
**a. Debenture Trust Deed:** - Draft a Debenture Trust Deed that outlines the rights and obligations of the company and the debenture holders. This is an agreement between the company and a trustee who will act on behalf of the debenture holders.
**b. Offer Letter:** - Prepare an offer letter to be sent to potential investors. This should include details about the debentures, including interest rates, maturity period, and repayment terms.
**c. Debenture Certificate:** - Design and prepare the debenture certificates that will be issued to investors.
### **3. Compliance with SEBI Regulations (if applicable)**
If the debentures are to be listed on a stock exchange, comply with SEBI regulations:
**a. SEBI Guidelines:** - Ensure compliance with SEBI’s guidelines for issuing debt securities, including filing a prospectus or offer document, and adhering to disclosure requirements.
**b. Prospectus:** - Prepare and file a prospectus with SEBI, which includes all material information about the company and the debenture issue.
### **4. Filing with Registrar of Companies (RoC)**
**a. File Form MGT-14:** - After the board resolution, file Form MGT-14 with the Registrar of Companies (RoC) to report the board resolution.
**b. File Form PAS-4 and PAS-5 (if private placement):** - For private placement of debentures, file Form PAS-4 (Private Placement Offer Letter) and Form PAS-5 (Return of Allotment) with the RoC.
**c. File Debenture Trusteeship Documents:** - File the Debenture Trust Deed and other relevant documents with the RoC.
### **5. Obtain Credit Rating (if applicable)**
**a. Credit Rating:** - If required, obtain a credit rating for the debentures from a recognized credit rating agency. This is particularly important if you intend to list the debentures or if it is a requirement under applicable regulations.
### **6. Issue Debentures**
**a. Allotment of Debentures:** - Allot the debentures to investors as per the terms set out in the offer letter.
**b. Issue Debenture Certificates:** - Issue debenture certificates to the investors.
### **7. Compliance and Reporting**
**a. Interest Payment:** - Ensure timely payment of interest to debenture holders as per the terms.
**b. Redemption:** - Ensure redemption of debentures on maturity as per the agreed terms.
**c. Filing Annual Returns:** - Include details of the debentures in the company’s annual returns filed with the RoC.
### **8. Ongoing Obligations**
**a. Maintain Records:** - Maintain records of debenture holders, interest payments, and redemption details.
**b. Compliance with Regulations:** - Ensure compliance with ongoing regulatory requirements related to debentures, including any disclosure requirements.
### **Key Documents and Forms:**
1. **Board Resolution:** - Document approving the issuance of debentures.
2. **Debenture Trust Deed:** - Agreement between the company and the trustee.
3. **Offer Letter:** - Document detailing the terms of the debentures offered to investors.
4. **Prospectus (if applicable):** - Detailed information about the debenture issue for public offers.
5. **Forms for Filing with RoC:** - Form MGT-14, PAS-4, PAS-5, and any other relevant forms.
### **Conclusion**
The issuance of unsecured debentures involves detailed planning, compliance with legal requirements, and ongoing obligations. It is advisable to consult with legal and financial experts to ensure adherence to all regulations and successful completion of the issuance process.
CAclubindia
