Skip to content

CS Executive · Company Law and Practice · Debt Instruments - Concepts

Rohini Power Ltd issued convertible debentures and has defaulted on redemption on the maturity date. Which statement is correct under the Companies Act, 2013?

On default in redemption or interest, the Tribunal may, on the application of any or all debenture-holders or the debenture trustee and after hearing the parties, direct the company to redeem the debentures forthwith with principal and interest due, as Section 71(10) provides.

  1. AOnly the Central Government can seek redemption
  2. BThe Tribunal may, on application of any or all debenture-holders or the debenture trustee, direct the company to redeem the debentures forthwith on payment of principal and interest dueCorrect
  3. CDebenture-holders must wait for winding up before any remedy
  4. DThe Registrar may order redemption on his own motion

Explanation

Under Section 71(10), on failure to redeem on maturity or to pay interest when due, the Tribunal may on application of any or all debenture-holders or the trustee, after hearing the parties, order redemption forthwith with principal and interest due. Waiting for winding up is not required, and the Registrar has no such power here.

Did you get it right without looking?

One question tells you little. A timed set on Debt Instruments - Concepts shows your real accuracy, how long you take and where you lose marks.

Practise Debt Instruments - ConceptsFree diagnostic mock

More Debt Instruments - Concepts questions