purvikakani (CS) (99 Points)
17 November 2014Dear Professional Friends & Colleagues,
One of the Pvt ltd company has issued debentures and entered into an agreement. As per the new act of 2013 unsecured debenutres cannot be issued and the company has issued unsecured debentures.
What can be done in the above case and how to rectify the same?
Best Regards
Purvi Kakani
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 18 November 2014
Company can issue unsecured debentures if the same are compulsorily convertible into shares within 5 years [Ref. Rule 2(1)(c)(ix) of Companies (Acceptance of Deposits) Rules 2014.].
purvikakani
(CS)
(99 Points)
Replied 18 November 2014
Dear Sir,
Thank you for the reply. However rule 2 1(c)(ix) says : any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company or bonds or debentures compulsorily convertible into shares of the company within five years
So doesnt this mention about secured debentures?
Best Regards
Purvi Kakani
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 19 November 2014
The word used in the rule is "OR" which means that the debentures could be either secured OR convertible within 5 years.
purvikakani
(CS)
(99 Points)
Replied 19 November 2014
Dear Sir,
Thanks a lot for the interpretation.
CAclubindia
