Responsibilities and Duties

Responsibilities and duties of a debenture trustee of obligation before appointment.

Must enter into a written agreement with the body corporate before the opening of the subscription list for issue of debentures. Agreement should contain the following:-

Agreeing to act as the trustee under the trust deed for securing an issue of debentures for the body corporate.

The time limit of the security for the debenture holders.

Obligations: The Debenture Trustee should accept the trust deed.

The deed should contain the following matter.

Rights of the Debenture holders and manner in which they are vested in the trustee.

Purpose of raising funds through debenture issue.

Description of debenture like, amount, tenure, interest, periodicity of payment, period for redemption, options available terms of conversion/redemption of the debentures.

Nature of charge, rank of charge of assets.

Creation of future security for the issue of debentures – time limit within which is to be created.

Events under which security becomes enforceable.

Creation of obligation of company not to create future security.

Minimum security cover require

A clause for subsequent valuation

Circumstances necessitating the enforceability of the security.

Preservation methods of assets charged as security circumstances under which security may be disposed or leased out with the approval of the trustee.

Inspection of charged.

Steps which would be taken by the Debenture Trustee in the event of default.

The companies’ duties should be specified in the agreement.

Other Miscellaneous provisions such as

Procedure for appointment

Removal of trustee,

Appointment of new trustee

Non-relinquishment from the assignment

Procedure for removal of debenture trustee by a resolution passed by at which 75% of debenture holders.

Provision for redressal of grievance of the debenture holders.