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    Debentures

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    Payal Patel
    Group 4 presented information on debentures and SEBI guidelines for debenture issuance in India. Debentures are certificates that provide loans to companies and offer fixed interest rates to debenture holders. SEBI has established several guidelines for debentures, including requirements for credit ratings, debenture redemption reserves, and appointment of debenture trustees. SEBI guidelines also specify rules for convertible debentures regarding conversion periods, premium amounts, and disclosure in prospectuses. The guidelines aim to provide transparency to help investors evaluate opportunities in the debt market.

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    Debentures

    Uploaded by

    Payal Patel
    5K views12 pages
    Group 4 presented information on debentures and SEBI guidelines for debenture issuance in India. Debentures are certificates that provide loans to companies and offer fixed interest rates to debenture holders. SEBI has established several guidelines for debentures, including requirements for credit ratings, debenture redemption reserves, and appointment of debenture trustees. SEBI guidelines also specify rules for convertible debentures regarding conversion periods, premium amounts, and disclosure in prospectuses. The guidelines aim to provide transparency to help investors evaluate opportunities in the debt market.

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    Group 4 presented information on debentures and SEBI guidelines for debenture issuance in India. Debentures are certificates that provide loans to companies and offer fixed interest rates to debenture holders. SEBI has established several guidelines for debentures, including requirements for credit ratings, debenture redemption reserves, and appointment of debenture trustees. SEBI guidelines also specify rules for convertible debentures regarding conversion periods, premium amounts, and disclosure in prospectuses. The guidelines aim to provide transparency to help investors evaluate opportunities in the debt market.

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    5K views12 pages

    Debentures

    Uploaded by

    Payal Patel
    Group 4 presented information on debentures and SEBI guidelines for debenture issuance in India. Debentures are certificates that provide loans to companies and offer fixed interest rates to debenture holders. SEBI has established several guidelines for debentures, including requirements for credit ratings, debenture redemption reserves, and appointment of debenture trustees. SEBI guidelines also specify rules for convertible debentures regarding conversion periods, premium amounts, and disclosure in prospectuses. The guidelines aim to provide transparency to help investors evaluate opportunities in the debt market.

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    Group 4

    Economic Policy/Guidelines

    SEBI Guidelines for Debentures in India


    Context
    Name Topic
    Nikhat Introduction to Debentures
    Types of Debentures

    Mitesh Merits & Demerits

    Monisha Difference between Debenture &


    Share

    Payal SEBI Guidelines


    Monisha Conclusion
    Introduction to Debentures
    • A debenture is defined as a certificate of agreement of loans
    which is given under the company's stamp and carries an
    undertaking that the debenture holder will get a fixed return
    (fixed on the basis of interest rates) and the principal
    amount whenever the debenture matures.
    Characteristics
    • Debenture Holder are the creditors of the company.
    • They are fixed interest debt instruments with varying period of
    maturity.
    • When offered for subscription a debenture redemption reserve
    has to be maintained.
    • If listed on the stock exchanges, they should be rated prior to the
    listing by any of the credit rating agencies designated by SEBI.
    Types of Debentures
    A. SECURITY :
    • Secured & unsecured
    B. CONVERTIBILITY:
     Fully Convertible & Non convertible
    C. TENURE :
     Redeemable & Non-Redeemable
    D. RECORDS:
     Registered & Bearer
    Merits
    No dilution of control
    Long term finance
    Tax Benefit
    Investor’s safety
    Demerits
    Fixed obligation
    Charge on assets
    No voting Rights
    Differentiation
    Debentures Shares
    Creditors of the company Owners of the company
    Have no voting rights and no consequent Have voting rights and consequent
    control of the company control of the company

    Interest is paid at a predetermined fixed Dividend on equity is paid at variable


    rate rate depending on profits

    On basis of Security, tenure, Equity shares and preference shares


    Convertibility, Records.

    Can be converted into shares Can not be converted into debentures

    On liquidation they are paid first On liquidation paid after paying


    debentures and creditors
    SEBI guidelines for debentures
    • Issue of FCDs having a conversion period more than 36 months
    will not be permissible, unless conversion is made optional with
    “put” and “call” option.
    • Compulsory credit rating will be required if conversion is made
    for FCDs after 18 months.
    • Premium amount on conversion, the conversion period, in stages,
    if any, shall be pre-determined and stated in the prospectus.
    • The interest rate for above debentures will be freely determinable
    by the issuer.
    • Issue of debenture with maturity of 18 months or less are exempt
    from the requirement of appointing Debenture Trustees or
    creating a Debenture Redemption Reserve (DRR).
    SEBI guidelines for debentures Contd.
    • In other cases, the names of the debenture trustees must be stated
    in the prospectus and DRR will be created in accordance with
    guidelines laid down by SEBI.
    • The trust deed shall be executed within six months of the closure
    of the issue.
    • Any conversion in part or whole of the debenture will be
    optional at the hands of the debenture holder, if the conversion
    takes place at or after 18 months from the date of allotment, but
    before 36 months.
    • Premium amount at the time of conversion for the PCD,
    redemption amount, period of maturity, yield on redemption for
    the PCDs/NCDs shall be indicated in the prospectus.
    Conclusion
    SEBI has laid down guidelines for debentures issued by
    the company in order to trade in the debt market.
    This helps investors to study the true and fair view to
    invest in the debt market.
    Webliography
    www.sebi.org
    www.wikipedia.org
    www.investopedia.com

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