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Visit a Company and Preparation of Informative Report on the Procedure of Issue of Debentures

INTRODUCTION :

visit a company and preparation of an informative report on the procedure of issue of shares or debentures.A debenture is a type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond to secure capital. Like other types of bonds, debentures are documented in an indenture.

Debenture holders (investors) do not have any rights to vote in the company’s general meetings of shareholders, but they are allowed separate meetings or votes e.g. on changes to the rights attached to the debentures.

The interest paid to debenture holders is calculated as a charge against profit in the company’s financial statements.

The main advantage of debentures to companies is the fact that they have a lower interest rate than e.g. overdrafts. Also, they are usually repayable at a date far off in the future.

For an investor, their main advantages are that they are often easy to sell in stock exchanges and they contain less risk than other options such as equities

AIMS AND OBJECTIVES :

The project aims to visit a company and preparation of informative report on the procedure of issue of shares or debentures

Objectives of the study are

  1. To learn what is debentures
  2. To learn different types of debentures
  3. To learn how debentures are issued
  4. To learn who can issue debentures
  5. To learn who can buy debentures
  6. To learn different requirements for issue of debentures
  7. To learn the conditions for the issue of debentures

METHOD AND METHODOLOGY :

The project aims to visit a company and preparation of informative report on the procedure of issue of shares or debentures

Objectives of the study are

  1. To learn what is debentures
  2. To learn different types of debentures
  3. To learn how debentures are issued
  4. To learn who can issue debentures
  5. To learn who can buy debentures
  6. To learn different requirements for issue of debentures
  7. To learn the conditions for the issue of debentures

DETAIL REPORT OF PROJECT :

The procedure for the issue of debentures is as follows:

(1) First of all, a Board meeting is convened at which the decision to issue debentures, the number and terms of issue and the rate of interest is taken by means of a resolution to that effect. However, where a company’s shares are listed on the stock exchange, the listing agreement stipulates that shareholders’ approval should be obtained for the offer of debentures to the public and therefore this approval is also to be obtained.

(2) Then the consent of the Controller of Capital Issues is obtained if the issue exceeds Rs 50 lakhs. If the money to be borrowed, together with the money already borrowed by the company (apart from temporary loans) exceed the aggregate of the paid-up capital of the company and its free reserves, permission of the General Body is also obtained, by ordinary resolution, for the proposed issue [Sec.

(3) In the case of issue of listed debentures to the public by public limited companies, the guidelines prescribed by the Government in that regard (discussed under the preceding heading) must be fully complied

(4) In case the debenture to be issued are bearer ones, it will be necessary to obtain permission from the Reserve Bank of India as well.

(5) In case the debentures are issued under a Trust Deed, necessary consent of trustees is obtained and a draft of Trust Deed is prepared. A draft of a prospectus and the Debenture Bond is also prepared.

(6) After the completion of these formalities, the Board approves the drafts of a prospectus, Trust Deed, and debenture bonds and directs the secretary to arrange for their printing.

(7) The Trust Deed is then executed with the trustees for debenture holders.

(8) The particulars of the charges created on the issue are to be filed with the Registrar of Companies within 30 days of the execution of the Trust Deed for registration and a Certificate of Registration is obtained. This Certificate is to be endorsed on every Debenture Certi­ficate. All particulars are also entered in the “Registrar of Charges” maintained by the company at its registered office.

(9) Where it is proposed to enlist the debentures in any stock exchange approval of the concerned stock exchange is to be obtained.

(10) A copy of the prospectus is then filed with the Registrar and the Prospectus is issued to the public. In case the debentures are to be issued privately (without making a public offer) a statement in lieu of prospectus is to be filed with the Registrar at least three days before the first allotment of debentures.

(11) After the allotment, the particulars about each debenture are entered in the Registrar of Debenture-holders and Deben­ture Certificates are prepared which are issued to the Allotters in due course.

BIBLIOGRAPHY / REFERENCE :

  1. http://www.yourarticlelibrary.com/financial-management/debentures-meaning-features-advantages-disadvantages/43834
  2. https://www.kotaksecurities.com/ksweb/Our-Offerings/Asset-Classes/non-convertible-debentures
  3. http://www.yourarticlelibrary.com/accounting/debentures/issue-of-debenture-at-par-premium-and-discount/46934
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Contents1 INTRODUCTION :2 AIMS AND OBJECTIVES :3 METHOD AND METHODOLOGY :4  NEEDS AND IMPORTANCE:5 DETAIL …

2 comments

  1. Nice project

  2. Usefull project for HSC students

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