POCEDURE FOR ISSUE OF “DEBENTURES”



POCEDURE FOR ISSUE OF  “DEBENTURES”         Series- 138

As I have already discussed the provisions relating to Debentures in my earlier article series. In this article I will share the complete process of issue of debenture under Companies Act 2013.

Work required to done before calling of Meeting:
ü  Identify the person to whom you will issue Debentures.
ü  Prepare the list of such persons to whom offer to subscribe debenture will give.
ü  Prepare Draft offer letter under PAS-4.
ü  Identify the debenture trustee (in case of offer for subscription is for more than 500 persons).
ü  If there is requirement to appoint Debenture Trustee, then obtain the consent of such debenture trustee.
ü  Ask the details from the Bank to open separate Bank Account.
ü  Identify the assets of the Company on which charge will be creating (in case of issue of secured debenture).
ü  Obtain the Valuation Report of the Property.
ü  Obtain the valuation report of Chartered accountant for valuation of equity shares. (  In case of issue of convertible debenture)

STEP-1
Call Meeting of Board Director:
ü  Issue Notice of Board Meeting to all the directors of Company at least 7 days before the date of Board Meeting.
ü   Attach Agenda, Notes to Agenda and draft resolution of Board Meeting along with Notice.
ü  Approach the Debenture trustee and [1]Obtain the consent of the Debenture Trustee.



STEP-II
Hold the Board Meeting:
ü  Check the quorum of Board Meeting.
ü  Decide whether Company wants to issue secured debenture or convertible debenture or any other mode of debentures.
ü  Get approve the list of such persons to whom offer for subscription will be given.
ü  Present Draft offer letter under PAS-4.
ü  Pass Board Resolution for approval of offer letter.
ü  [2]Pass Board Resolution to increase borrowing limit of the Company subject to approval of the Shareholder in General Meeting.
ü   Passing of resolution for Issue the Notice of General Meeting along with explanatory statement. (According to SS-2).
ü  Passing of resolution for Authorize a Company Secretary or director of Company to issue notice of General Meeting.
ü  Passing of Resolution for take note of valuation report.
ü  Notice shall specify place, date, day and the hour of the Meeting and shall contain a statement on the business to be transacted in theMeeting. [Section-101(2)]
ü  Authorize a director of Companyto issue notice of General Meeting.
ü  Passing of resolution for Open Separate Bank Account for allotment of debentures.
ü  To pass resolution for appointment of debenture trustee. If required.

[3]STEP-III
File Form with Registrar:
ü  File MGT-14 with Registrar within 30 days of passing of Resolution for
§  Issue of debentures
§  Borrow Money
Attachments:
ü  Certified True copy of Board Resolution.

STEP-IV
Hold Extra Ordinary general Meeting:
ü  Check the quorum of Meeting. (Section-103).
ü  Present Offer Letter in PAS-4 before the members of the Meeting.
ü  Pass Special Resolution for Private Placement of Debentures.
ü  Pass Special resolution for increasing the borrowing limit of the Company to issue Debentures.


STEP-V
Circulate Letter of Offer in form PAS-4:
ü  Offer letter shall be accompanied by an application form serially numbered and addressed specifically to the person to whom the offer is made.
ü  Offer Letter sent either in writing or electronic mode.
ü  Issue offer letter within 30 days of General Meeting/recording the name of such person.
ü  Offer letter should mention the name of the Debenture Trustee, if appointed.

STEP-VI
File Form with Registrar:
ü  File MGT-14 with Registrar within 30 days of passing of Special Resolution.
Attachments:
ü  Notice of General Meeting along with Explanatory Statement.
ü  Certified True copy of Special Resolution.
ü  Minutes of General Meeting

STEP- VII
Open Separate Bank Account:
ü   The payment to be made for subscription to securities shall be made from the bank account of the person subscribing to such securities.
ü   The Company shall keep the record of the Bank Account from where such payment for subscription has been received.

STEP- VIII
File Form with Registrar:
ü  File GNL-2 with Registrar within 30 days of circulation of offer letter.
ATTACHMENTS:
Ø  PAS-4 (Offer Letter).
Ø  PAS-5 (Complete record of Private Placement).

STEP- IX
Call Board Meeting after receiving of allotment of money.
ü  Issue Notice of Board Meeting to all the directors of Company at least 7 days before the date of Board Meeting. [Section-173(3)]
ü  Attach Agenda, Notes to Agenda and draft resolution of Board Meeting along with Notice.

STEP- X
Hold the Board Meeting:
ü  Check the quorum of Board Meeting.
ü  Present List of Allottes before the Meeting.
ü  Pass Board Resolution for allotment of Debentures (within 60 days of receiving of money).
ü  Pass Resolution for issue of Debentures Certificate in same Meeting.
ü  Authorize to two directors and a authorize person to sign Debenturescertificate.
ü  [4]Enter into Debenture Trust deed (SH-12), If required.
ü  To pass a resolution to create Debenture Redemption reserve.
ü  [5]Pass a Board resolution to create charge on the assets of the Company. (in case of secured debentures)

STEP- XI
File form with ROC:
File CHG-9 with Registrar of Company.
ATTACHMENTS:
Ø  Certified true copy of resolution authorizing the issue of the debenture series is a mandatory in case of creation of charge.
Ø  Instrument containing details of the charge created or modified is mandatory in all cases.
Ø  Debenture Trust Deed, If prepared.
Ø  Certified True copy of Special Resolution

STEP- XII
File form with ROC:
ü  File PAS-3 with Registrar of Company.
ATTACHMENTS:
-   List of Allottes.
-   Certified True copy of Board Resolution for allotment of Debenture.
-   Valuation Report
-   Certified True copy of Special Resolution

STEP- XIII
Entry into register of Debenture:
ü  The entries in the registers maintained under section 88 form MGT-2 shall be made within 7(Seven) days after the Board of Directors approves the allotment of debentures

STEP-XIV
Issue Share Certificate:
ü  Issue Debenture Certificate within 6 (Month) months from the date of allotment of Debentures.

STEP-XV
Stamp Duty:
ü  Stamp Duty adjudication as per provisions & rates of Stamp Act of the State (only applicable on Marketable Debenture)




FLOW CHART:
S. NO
DAYS
PARTICULARS
DOCUMENTATION/ INFORMATION
FORMS
0
Check Points
ü  Identify the person to whom you will issue Debentures.
ü  Prepare the list of such persons to whom offer to subscribe debenture will give.
ü  Prepare Draft offer letter under PAS-4.
ü  Identify the debenture trustee (in case of offer for subscription is for more than 500 persons).
ü  If there is requirement to appoint Debenture Trustee, then obtain the consent of such debenture trustee.
ü  Ask the details from the Bank to open separate Bank Account.
ü  Identify the assets of the Company on which charge will be creating (in case of issue of secured debenture).
ü  Obtain the Valuation Report of the Property.
ü  Obtain the valuation report of Chartered accountant for valuation of equity shares. (  In case of issue of convertible debenture)
N.A
1
Issue the Notice of the Board meeting
·      Notice
·      Agenda
·      Notes on Agenda
·      Draft Resolution
N.A
9
Convening of the Board Meeting
·   Attendance Sheet
·   Present draft offer letter PAS-4.
·   Passing of Resolution for
-         Take note of valuation report
-         Decide whether Company wants to issue secured debenture or convertible debenture or any other mode of debentures.
-         Approval of Offer Letter.
-         Issue of notice General Meeting.
-         Take note Valuation Report.
-         Open of Bank Account.
N.A
32
Convening of the Extra Ordinary General Meeting
ü  Pass Special Resolution for Private Placement of Debentures.
ü  Pass Special resolution for increasing the borrowing limit of the Company to issue Debentures.
N.A
33
Circulation of Letter of offer
The Letter of Offer together with all attachments should be dispatched to the shareholders.
PAS-4
·         Offer will be open for minimum period of 30 days. 
·         Company will open the Separate Bank account.
N.A
62
Filing of e-forms
·         Filing of forms within 30 days of passing of special resolution.
·         Special Resolution to ROC
MGT- 14
63
Filing of e-forms
·         Filing of forms within 30 days of Issue of Letter of Offer.
·         Attachment:
ü  PAS-4
ü  PAS-5
GNL-2
80
Payment from subscribers
Receipt of money from all the subscribers along with a letter for approval of offer.
N.A
82
Issue the Notice of the Board meeting
·      Notice
·      Agenda
·      Notes on Agenda
·      Draft Resolution
N.A
90
Convening of the Board Meeting
·   Attendance Sheet
·   Passing of Resolution for
-         Allotment of Debentures
-         Issue of Debenture Certificates
-         Enter into debenture Deed (SH-12)
-         Creation of Debenture Redemption Reserve
-         Creation of Charge on assets of the Company.
N.A
97
Entry into Register of Member
The entries in the registers maintained under section 88 form MGT-2 shall be made within 7(Seven) days after the Board of Directors approves the allotment of debentures
MGT-2
120
Filing of e-forms
ü  Filing within 30 days of allotment of debentures.
ATTACHMENTS:
-         List of Allottees.
-         Certified True copy of Board Resolution for allotment of Debenture.
-         Valuation Report
-         Certified True copy of Special Resolution
PAS-3







120
Filing of e-forms
ü  File CHG-9 with Registrar of Company.
 ATTACHMENTS:
-         Certified true copy of resolution authorizing the issue of the debenture series is a mandatory in case of creation of charge.
-         Instrument containing details of the charge created or modified is mandatory in all cases.
-         Debenture Trust Deed, If prepared.
CHG-9
90 days + 6 Month
Issue of Share Certificate
Issue Debenture Certificate within 6 (Month) months from the date of allotment of Debentures.
N.A
Forms Filling During the Process
MGT-14:  File form with ROC within 30 days of passing of Board Resolution for issue of Debentures
Attachment:
v  CTC of Board Resolution for Issue of Letter of offer for right issue of Debentures.
v  CTC of Board Resolution to Borrow Money.

MGT-14:  File form with ROC within 30 days of passing of Special Resolution
Attachment:
v  Notice of General Meeting
v  CTC of Special Resolutions
v  Minutes of General Meeting

GNL-2 : File Form With ROC within 30 days of Circulation of Letter of Offer:
Attachment:
v  PAS-4
v  PAS-5

CHG- 9 : File Form With ROC within 30 days of creation of security:
Attachment:
v  CTC of Resolution for secure Debentures.
v  Debenture Trust Dee, if any
v  Instrument containing details of the charge created or modified is mandatory in all cases.

PAS-3: File form with ROC within 30 days of Passing of Board Resolution for Allotment of Shares.
Attachment:
v  CTC of Board Resolution for allotment of Shares.
v  List of Allottees.




[1]Required to appoint in case company giving offer to subscribe debentures to more than 500 persons.
[2] This resolution will be passed only in the condition when the current borrowing along with old borrowing exceeding the 100% of paid up share capital and free reserve.
[3] No need to file this MGT-14 in case of Private Limited Company.
[4] Company have time of 3 months form the date of closure of offer for execute debenture trust deed.
[5]In case of issue of the Secured Debenture.

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