Issuance of Debentures
Overview – Issuance of Debentures
Debentures are a common form of debt instrument issued by companies to raise long-term funds from investors. Unlike equity shares, debentures represent a loan made to the company by the debenture holders, who receive fixed interest and repayment of principal on maturity. Debentures can be secured or unsecured, convertible or non-convertible, and are an essential financing tool for corporate growth, capital expenditure, or working capital needs.
At Cardiff Services, we assist companies in the entire process of debenture issuance—from structuring the terms and conditions, drafting offer documents, obtaining necessary approvals, to ensuring compliance with the Companies Act, 2013, SEBI regulations (if applicable), and RBI guidelines for foreign investment.
Our end-to-end services ensure that the issuance of debentures is carried out smoothly, securely, and in line with all legal requirements, providing companies with a reliable source of capital.
Features – Issuance of Debentures
Debt Instrument: Debentures represent a loan taken by the company from investors, repayable with interest.
Fixed Interest (Coupon): Debenture holders receive fixed periodic interest payments, usually semi-annual or annual.
No Equity Dilution: Issuing debentures does not dilute the ownership stake of existing shareholders.
Types of Debentures: Can be secured (backed by assets) or unsecured (based on company’s creditworthiness).
Convertible vs. Non-Convertible: Debentures may convert into equity shares after a specified period or remain as debt.
Fixed Tenure: Debentures have a predetermined maturity date when the principal amount is repaid.
Tradability: Listed debentures can be traded on stock exchanges, providing liquidity to investors.
Priority in Repayment: Debenture holders have a priority claim over equity shareholders in case of liquidation.
Regulatory Compliance: Issuance governed by the Companies Act, SEBI regulations (if listed), and RBI/FEMA for foreign investors.
Tax Benefits: Interest paid on debentures is tax-deductible for the company.
Flexible Terms: Companies can negotiate terms like interest rate, tenure, security, and convertibility.
Suitable for Large Capital: Enables companies to raise significant funds from institutional and retail investors.
Issuer’s Credit Rating: Credit rating of debentures impacts interest rates and investor confidence.
Documents Required – Issuance of Debentures
Board Resolution approving the issuance of debentures
Shareholders’ Resolution (if required, especially for altering capital structure)
Debenture Trust Deed (for secured debentures)
Draft Offer Letter or Prospectus (if public issuance)
Debenture Agreement detailing terms and conditions
Credit Rating Certificate (for debentures above prescribed limit)
Audited Financial Statements of the company
Valuation Report (if applicable)
Copy of Certificate of Incorporation, MOA & AOA
KYC documents of debenture trustees and investors (if private placement)
Copy of Debenture Certificates to be issued
Filing forms with Registrar of Companies (RoC), such as PAS-3 (Return of Allotment)
Foreign Investment approval documents (if any foreign investment involved)
Legal Opinion (optional but recommended)
Procedure – Issuance of Debentures
Board Meeting
Approve the issuance of debentures and decide key terms such as amount, interest rate, tenure, security (if any), and conversion (if applicable).
Shareholders’ Approval
Obtain approval from shareholders through a General Meeting, if required by the Articles of Association or Companies Act (especially for altering capital structure).
Preparation of Documents
Draft necessary documents such as Debenture Trust Deed (for secured debentures), Debenture Agreement, Offer Letter/Prospectus, and related agreements.
Credit Rating (if applicable)
Obtain credit rating from a recognized agency if the debenture issuance exceeds prescribed limits.
Filing with RoC & Regulatory Approvals
File required forms (e.g., PAS-3 for return of allotment) with Registrar of Companies.
Obtain approvals from SEBI (for listed entities) and RBI/FEMA (for foreign investment), if applicable.
Issue Offer Letter / Prospectus
Send the offer letter or prospectus to prospective investors in case of public/private placement.
Receipt of Subscription Money
Collect the subscription amount from investors within the prescribed time.
Allotment of Debentures
Convene Board Meeting to approve the allotment of debentures to investors.
Issue Debenture Certificates
Issue physical certificates or demat statements to debenture holders.
Register & Statutory Records Update
Update the Register of Debenture Holders and other statutory registers.
Post-Issuance Compliance
Ensure timely payment of interest and principal.
Conduct necessary filings and maintain compliance with ongoing statutory requirements.
With Cardiff Services, your debenture issuance is handled professionally, ensuring smooth execution, regulatory adherence, and risk mitigation.
Frequently Asked Questions
A company name search ensures that your chosen business name is unique, legally compliant, and not already registered with Companies House UK. It helps you avoid legal disputes, trademark issues, and confusion in the Cardiff business market.
If your desired name is already registered, you’ll need to choose a different name or modify it. Using a taken name could result in rejection by Companies House or potential legal issues. Our experts can help you brainstorm alternative names that are compliant and market-ready.
It’s not advisable to use a name that’s too similar to another company, especially within the same industry. Similar names can confuse customers and risk trademark disputes. A company name search helps you identify these risks early.
For a company name search in Cardiff, you may need:
Proposed company name
Business entity type (Ltd, LLP, Partnership, etc.)
Jurisdiction (Cardiff / UK)
Owner or shareholder details (if applicable)
Business description
A “high probability” result means your proposed company name is likely to be available, but further checks are recommended. This is why our detailed Cardiff Company Name Search Report includes both identical and similar names for clarity.
Certain words are restricted under UK law (e.g., “bank,” “insurance,” “government”). If you want to use them, you’ll need special approval from regulatory bodies. We guide you through this process if your Cardiff business requires such terms