Explain the guidelines of SEBI for creating Debenture Redemption Reserve.

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Solution

Securities and Exchange Board of India (SEBI) have provided some guidelines for redemption of debentures. The focal point of these guidelines are:

(i) Every company shall create Debenture Redemption Reserve in case of issue of debenture redeemable after a period of more than 18 months from the date of issue.

(ii) The creation of Debenture Redemption Reserve is obligatory only for non-convertible debentures and non-convertible portion of' partly convertible debentures:

(iii) A company shall create Debenture Redemption Reserve equivalent to at least 50% of the amount of debenture issue before starting the redemption of debenture.

(iv) Withdrawal from Debenture Redemption Reserve is permissible only after 10% of the debenture liability has already been reduced by the company.

SEBI guidelines would not apply under the foltowing situations:

(i) Infrastructure company (a company wholly engaged in the bussiness of developing, maintaining and operating infrastructure facilities), and
(ii) A company issuing debentures with a maturity period of not more than 18 months.

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Similar questions

As per SEBI Guidelines, an amount equal to _____ of the debenture issue must be transferred to Debenture Redemption Reserve before redemption begins.

Where a company creates a Debenture Redemption Reserve for the redemption of such debentures, the amount shall be credited, out of its ___every year until such debentures are redeemed.

Q. Debenture redemption reserve is transferred to reserve.

Q. State the provisions of the Companies Act,

2013

for the creation of 'Debenture Redemption Reserve'.

Debenture Redemption Reserve ensures that the _____________ amount of the debenture holders is safeguarded.

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