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Conditions for Public Issue of Debentures

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Conditions for Public Issue of Debentures

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Questions and Answers

What is the primary reason companies prefer issuing debentures to raise funds?

Flexibility in securities market

Longer repayment period (correct)

Ease of issuing process

Lower interest rates

What is a necessary condition for a company to make a public issue of debentures?

The company has not been prohibited from accessing the securities market by SEBI (correct)

The company has a good credit rating

The company has a large cash reserve

The company has issued equity shares in the past

Which regulation governs the issue of secured debentures?

Companies Act, 2013

RBI Guidelines

Companies (Share Capital and Debentures) Rules, 2014 (correct)

SEBI (Issues and Listing of Debt Securities) Regulations, 2008

What is the primary purpose of the SEBI (Issues and Listing of Debt Securities) Regulations, 2008?

To cover provisions for issue and listing of debentures not convertible into equity shares Signup and view all the answers

Which of the following is not a provision that a company must fulfill when issuing debentures?

Declaring dividends to shareholders Signup and view all the answers

What is the minimum period of default in repaying debt securities that would prohibit a company from accessing the securities market?

6 months Signup and view all the answers

Which of the following provisions requires a company to follow the same disclosure norms as applicable to equity shares?

SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2009 Signup and view all the answers

What is the primary purpose of the RBI Guidelines in relation to debentures?

To provide guidelines for banks raising capital through non-equity instruments Signup and view all the answers

What is the role of the Board of Directors in relation to the issue of debentures?

To use their borrowing powers up to the limit permitted by the Articles of Association Signup and view all the answers

What is the purpose of creating a Debenture Redemption Reserve?

To comply with the regulatory requirements Signup and view all the answers

What is the role of Debenture Trustees in relation to the issue of debentures?

To approach NCLT in case of non-compliance Signup and view all the answers

What is the limitation on the borrowing powers of the Board of Directors in relation to the issue of debentures?

Limitation by the Articles of Association Signup and view all the answers