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CA Foundation · Business Laws · The Companies Act, 2013

Gopal Industries Ltd, a public company, wants to issue secured debentures to the public. Which statement correctly reflects the requirements for such an issue under the Companies Act, 2013?

A company issuing debentures to the public must appoint one or more debenture trustees before issuing the prospectus or letter of offer. The trustees protect the debenture holders' interests. Debentures cannot carry voting rights, so the option claiming otherwise is wrong.

  1. ADebentures need not be secured if the company is profitable
  2. BDebentures may carry voting rights at general meetings
  3. CA debenture trustee must be appointed before the issue of a prospectus or letter of offer to the publicCorrect
  4. DDebenture redemption reserve is never required

Explanation

For an issue of debentures to the public, the company must appoint a debenture trustee before issuing the prospectus or offer letter. The question concerns a secured issue, so the secured status is already given. Debentures cannot carry voting rights, so that option is wrong.

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