MBA (Finance)III – Semester, Merchant Banking and Financial Services, Unit 2.1
Define Debenture Trustees
“Debenture trustee is a trustee for a trust deed needed for securing any issue of debentures by a company/body corporate or any private placement of debentures by a listed/proposed to be listed company. Trust Deed means, a deed executed by the body corporate in favour of the trustees named wherein for the benefit of debenture holder”.
Definition
“Debenture trustee is a trustee for a trust deed needed for
securing any issue of debentures by a company/body corporate or any private placement
of debentures by a listed/proposed to be listed company. Trust Deed means, a
deed executed by the body corporate in favour of the trustees named wherein for
the benefit of debenture holder”.
Who can be a Trustee?
Banks, Public Finance Institutions, Insurance Companies and Body
Corporate can be a trustee when they fulfilling the capital adequacy
requirement of ` 1 crore in terms of net
worth.
Net worth = Paid-up capital +
Free reserve – (accumulated losses + deferred expenditure not written off).
The Certificate of registration from SEBI is mandatory to act as
debenture trustee.
Who cannot act as a Debenture
Trustee?
A debenture trustee cannot act as a trustee for any issue of
debenture if (a) it is an associate to
the body corporate; (b) it has lent money to the body corporate; (c) if the
loan is not fully repaid; (d) if it proposes to lend money to the body
corporate.
Factors considered for
Registration by SEBI
Infrastructure facilities like office space, equipment and manpower
to discharge duties effectively.
Past experience as a debenture trustees (or) employment of two
experienced persons in the matters relating to debenture trustee.
Should not have direct/indirect connection with the applicant.
Engagement of minimum of one person with professional qualification
in law.
Any of its directors/principal officers should not have been
convicted for any offence involving more turpitude or should not have been
found guilty of any economic offence.
Must be fit and a proper person as per the criteria specified in
SEBI intermediary regulation 2008.
Period of Registration &
Registration Fee
The Registration is valid for 3 years and can be renewed before 3
months following the expiry of the period of the certificate.
Registration fee is ` 10 lakh.
Renewal fee is ` 5 lakh
Conditions of Registration are the same as those applicable to
merchant bankers.
