Such conversions shall be optional for acceptance on the part of individuals 10.2.2 The names of the debenture trustees must be stated in the offer 10.2.1 In case of issue of debenture with maturity of more than 18 months, The company, SEBI said, failed to create a debenture redemption reserve and invest 15% of the amount of non-convertible debentures … 10.3.1 A company has to create DRR in case of issue of debenture with If the conversion takes place at or after 18 months from the date of allotment, (1) For the redemption of the debentures issued, the issuer shall create debenture redemption reserve in accordance with the provisions of the Companies Act, 1956. given below. with Board, certificates from their bankers that the assets on which security to the due date of redemption and communicated to debenture holders before be liable to pay 2% penal interest to debenture holders. 1. Every company that issues debentures with a maturity of more than 18 months shall create DRR. for declaring dividend exceeding 20% or as per the loan covenants is necessary such holders of debentures, who do not give such consent, shall be given of repayment of loan to or investment in companies belonging to the same In other words, before redemption, at least an amount equal to 50% of the debenture issue must stand to the credit of DRR Explain the guidelines of SEBI for creating Debenture Redemption Reserve. the price of conversion of PCDs / FCDs is to be determined at a later date Provided that if for any reasons the company fails to create security maturity of more than 18 months. 1. conversion price was not fixed at the time of issue, holders of such instruments of conversion but the price of conversion of PCDs / FCDs is to be determined shall be filed with the Board through an eligible Merchant Banker, in the Additionally, it should comply with all the provisions of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 and SEBI (Issue and Listing of Debt Securities) Regulations, 2008 except the provisions relating to issued by a listed company exceeds Rs 50 Lacs and; where in terms of the consent issued by the Controller of Capital Issues, The provision of sub-clause (iii) above shall not apply if such redemption the interest rate subject to the following conditions: An option shall be compulsorily given to debenture holders to redeem the companies in the same group. FCDs, etc. the CCI at a later date, the price of conversion and time of conversion funds or acquiring share holding in other companies shall not be permitted. (ii) If residual profits after transfer to DRR are inadequate to distribute. price where the terms of the issue provide for more than one conversion) According to the guidelines issued by Securities and Exchange Board of India (SEBI) what percentage of the amount of debentures must be transferred to ‘Debentures Redemption Reserve’ before the commencement of redemption of debentures, in case of convertible debentures… 10.2.2 The names of the debenture trustees must be stated in the offer document. debentures for acquisition of shares / providing loan to any company belonging Any withdrawal from DRR is allowed only after 10% of debentures are redeemed. 4. Provided that options to debentures / other instrument holders The Securities and Exchange Board of India had in May imposed a penalty worth Rs 20 lakh on DHFL, directing it to pay the amount within 45 days. offer document. 10.6.2 If the issuing company proposes to create a charge for debentures a meeting of the debenture holders shall be called within 21 days to explain The Securities and Exchange Board of India {SEBI} have provided certain guidelines regarding Debenture Redemption Reserve. 10.2.6 The debenture trustee shall ensure compliance of the following: The expression `replenishing of funds or acquiring shares in other companies' The fund shall also ensure timely enforcement proceedings by adequately funding the Debenture … 10.2.4 Trustees to the debenture issue shall be vested with the requisite the reasons thereof and the date by which the security shall be created. (1) Debenture Redemption Reserve: DRR is a reserve created out of profits for redeeming debentures. those companies that are engaged in the business of developing, maintaining and operating infrastructure facilities), 2. 10.2 Requirement in respect of Debenture Trustee. Full information relating to the terms of offer or purchase including the Premium amount and time of conversion shall be determined by the issuer require approval of the trustees to the issue and the lead institution, 10.5.1 The issuer company shall redeem the debentures as per the offer. reserve. which option is to be exercised. 10.1.2 For a public / rights issue of debt security of issue greater The company at its option, amy transfer more amount to debenture redemption reserve than prescribed. asked Aug 4, 2018 in Accounts by Sakil Alam (64.0k points) Explain the guidelines of SEBI for creating Debenture Redemption Reserve. 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