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CS Professional · Strategic Management and Corporate Finance · Role of Intermediaries in Fund Raising

Meridian Infra Ltd plans a public issue of NCDs. Its board asks the company secretary which of the following is a core duty of the debenture trustee after allotment.

A core duty of the debenture trustee is monitoring that the security cover stated in the offer document and trust deed is maintained. Fixing coupons is the issuer's decision, underwriting belongs to underwriters, and rating is done by a credit rating agency, so those are not trustee duties.

  1. AFixing the coupon rate on behalf of the issuer
  2. BUnderwriting the unsubscribed portion of the issue
  3. CMonitoring that security cover is maintained as stated in the offer document and trust deedCorrect
  4. DAssigning the credit rating to the debentures

Explanation

The trustee's post-allotment role includes ensuring security is created and the stipulated security cover is maintained, and taking action on defaults. Coupon fixing is the issuer's decision, underwriting is done by underwriters, and rating is done by a credit rating agency.

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