Tag Archives: Debentures

Notification of Sections Relevant for NCLT


Yesterday late evening, I posted here about press release issued by Ministry of Corporate Affairs. Soon thereafter, two files uploaded on Official Gazette website with two notifications in each. In earlier post here today, we discussed establishment and jurisdiction of various NCLT benches.

In this post, we will have a bird’s eye view on Sections notified on 1st June 2016 related to NCLT.

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REPORT OF THE COMPANIES LAW COMMITTEE – 4


On 1st February 2016, Ministry of Corporate Affairs uploaded the report of Companies Law Committee on its website here. In 4th post on this report, we will discuss recommendations of the committee related to shares, debentures, general meeting, NFRA, Board Report, CSR etc.

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DEBENTURES


A Company may raise a debt capital, which is not a nature of Deposits, by issue of debentures under Section 71 of the Companies Act 2013 as we discussed earlier here.

Debenture under the Companies Act 2013 is wide and inclusive terms and considered to Promissory Notes also. This is play of mind, imagination and requirement to design a debenture within boundaries of law.

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DEBENTURE (Companies Act 2013)


A bond from the Dutch East India Company, dati...

A bond from the Dutch East India Company, dating from 7 November 1623, for the amount of 2,400 florins. (Photo credit: Wikipedia)

Debenture is most important instrument to raise capital for a company. A company use debenture to raise debt capital. Popularly, debenture issued by public sector companies with government approval is called bonds.

Section 2 (30) of the Companies Act, 2013 define inclusively debenture as “debenture” includes debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not.

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SHARE CAPITAL (Companies Act, 2013)


We have discussed earlier post The Company under the Companies Bill 2012 which is still relevant when the bill become Act; all companies do not have share capital. Only companies limited by shares have share capital.

KIND OF SHARE CAPITAL (SECTION 43):

The share capital of companies limited by share shall be of two kinds, namely;

(a)  equity share capital;

(b) Preference share capital.

Here, use of two terms “Shall be” and “and” denote this is a requirement to have both kind of share capital but, according to further reading, company may have zero equity or preference share capital.

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