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Debenture Trustee – Its Position, Rights and Duties

Debenture Trustee

Debenture trustee, in simple terms, means any person who is given the responsibility for issuing and distributing debentures. If any company is looking for raising the capital, then they can chose the option of issuing the stocks as a form of debt with a condition that the debt had to be repaid at a specific interest rate.

The debenture trustees keep a contact with different groups. They act as a middleman between the company that issued debentures and also those debenture holders who are collecting interest payments.

In India, the debenture trustees are regulated by Securities Exchange Board of India (SEBI). Under SEBI (Debenture Trustee) Regulations, 1993 there are rules regarding eligibility criteria, registration, review, code of conduct etc.

DEBENTURE TRUSTEE’s APPOINTMENT

A company is required to appoint a debenture trustee when it issues a prospectus or make a public offer. Also, the appointment is required when any company makes an offer to its members exceeding the number of 500 or more in order to subscribe for the debentures.

If the issue of debentures is for a maturity less than 18 months then it is not necessary to appoint a debenture trustee.

Now, the entities that can be appointed as a debenture trustees are scheduled commercial bank which carries any commercial activity, an insurance company, any financial institution or a body corporate. These entities are required to be registered with SEBI.

DEBENTURE TRUSTEE’s DUTIES

The primary duty of a debenture trustee is to protect the interest of the debenture holders. They are some specific duties given to the debenture holders under the rules of Companies Act. They are:

DEBENTURE TRUSTEE’s RIGHTS

REFERENCES

See Also: https://lawyersgyan.com/blog/clearing-corporation-of-india-its-structure-and-role-in-the-economy/

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