Issue of Secured Debenture

The company shall not issue secured debentures, unless it complies with the following conditions, namely:-

a. An issue of secured debentures may be made, provided the date of its redemption shall not exceed ten years from the date of issue.

Provided that the following classes of companies may issue secured debentures for a period exceeding ten years but not exceeding thirty years,

Ø Companies engaged in setting up of infrastructure projects;

Ø (ii) ‘Infrastructure Finance Companies’ as defined in clause (viia) of sub-direction (1) of direction 2 of Non-Banking Financial (Non-deposit accepting or holding) Companies Prudential Norms (Reserve Bank) Directions, 2007;

Ø ‘Infrastructure Debt Fund Non-Banking Financial companies’ as defined in clause (b) of direction 3 of Infrastructure Debt Fund Non-Banking Financial Companies (Reserve Bank) Directions, 2011.

b. such an issue of debentures shall be secured by the creation of a charge, on the properties or assets of the company, having a value which is sufficient for the due repayment of the amount of debentures and interest thereon;

c. the company shall appoint a debenture trustee before the issue of prospectus or letter of offer for subscription of its debentures and not later than sixty days after the allotment of the debentures, execute a debenture trust deed to protect the interest of the debenture holders ; and

d. the security for the debentures by way of a charge or mortgage shall be created in favour of the debenture trustee on

a. any specific movable property of the company (not being in the nature of pledge); or

b. any specific immovable property wherever situate, or any interest therein.