0
What else can I help you with?
What is redemption of debenture?
Redemption of debentures refers to the process by which a company repays the principal amount of its debentures to the debenture holders at or before the maturity date. This can occur through various methods, such as lump-sum payment, periodic repayments, or conversion into equity shares, depending on the terms outlined in the debenture agreement. Timely redemption is crucial for maintaining investor confidence and adhering to legal obligations, as it signifies the company's financial responsibility.
What is the difference between conversion and redemption of debentures?
Conversion of debentures refers to the process by which debenture holders can exchange their debentures for equity shares of the issuing company, often at a predetermined conversion ratio. Redemption, on the other hand, involves the repayment of the debenture's face value to the debenture holders at maturity or upon a specified date, without converting them into shares. Essentially, conversion changes the nature of the investment from debt to equity, while redemption involves settling the debt obligation in cash.
What is debenture redemption fund?
A debenture redemption fund is a reserve established by a company to ensure the repayment of its debentures at maturity. It involves setting aside a portion of profits or cash in a dedicated account over time, which accumulates to meet future repayment obligations. This fund provides security to debenture holders, as it demonstrates the company's commitment to fulfilling its debt obligations. By maintaining this fund, the company can manage its liabilities more effectively and enhance investor confidence.
Which Indian companies have recently issued debentures?
recently which industry/company had issued its debentures
When to create a Debenture Redemption Reserve?
Most companies retire debentures by issuing another set of debentures, hence, most companies don't park funds for retiring debentures by creating any fund. The bond market will surely get affected negatively by such a move of the ministry of corporate affairs. Section 117C of the Companies Act, 1956, requires every company issuing debentures to create a debenture redemption reserve (DRR) for the redemption of such debentures and transfer an 'adequate' amount from its profits every year to such DRR until the issued debentures are redeemed. Hence, every issue of redeemable debentures requires creation of a DRR. The said Section, however, does not provide the meaning of the word 'adequate'. In the year 2002, the ministry of corporate affairs (MCA) issued a circular clarifying the meaning of 'adequate' and provided the percentage which is mandatorily required to be transferred to DRR by certain class of companies. However, to develop the bonds market, MCA issued another clarification circular on 11 February 2013 (Circular 2013)
Define redemption of debentures out of capital?
When debentures are redeemed out of capital, no transfer is made to general reserve or debenture redemption reserve account. In this method it is assumed that the company has sufficient funds to redeem the debentures. So the profits are not utilised to replace the debentures.It affects adversely to the Working Capital of the company.
What is redemption of debentures using purchase of own debenture?
A company can buy its own debenture in the open market, if it is authorised by its AOA. the debentures so purchased can be used either for immediate cancellation or redemption of debenture or for investment. the debenture so purchase for investment can be subsequently either be issued to fullfill additional requirements of cash or can be cancelled if the company so desires. debentures when purchases for investment are popularly known as 'OWN DEBENTURES.'
What are the reasons for the creation of debenture redemption reserve fund?
Indian Companies Act of 1956 added during an amendment in the year 2000. It states Indian company that issues debentures must offer debenture redemption service to protect investors against the possibility of company default. If a company does not create a reserve within 12 months of issuing the debentures, they will be required to pay 2 percent interest in penalty to the debenture holders. Only debentures that were issued after the amendment in 2000 are subject to the debenture redemption service.
Why debenture redemption reserve is transfer to general reserve?
When debentures are redeemed payment is made from a reserve which is created at the time of purchase of such debentures,therefore at the time of payment first it is transferred to general reserve then as it is expenditure to company.
What is redemption of debenture?
Redemption of debentures refers to the process by which a company repays the principal amount of its debentures to the debenture holders at or before the maturity date. This can occur through various methods, such as lump-sum payment, periodic repayments, or conversion into equity shares, depending on the terms outlined in the debenture agreement. Timely redemption is crucial for maintaining investor confidence and adhering to legal obligations, as it signifies the company's financial responsibility.
What is the difference between conversion and redemption of debentures?
Conversion of debentures refers to the process by which debenture holders can exchange their debentures for equity shares of the issuing company, often at a predetermined conversion ratio. Redemption, on the other hand, involves the repayment of the debenture's face value to the debenture holders at maturity or upon a specified date, without converting them into shares. Essentially, conversion changes the nature of the investment from debt to equity, while redemption involves settling the debt obligation in cash.
What is debenture redemption fund?
A debenture redemption fund is a reserve established by a company to ensure the repayment of its debentures at maturity. It involves setting aside a portion of profits or cash in a dedicated account over time, which accumulates to meet future repayment obligations. This fund provides security to debenture holders, as it demonstrates the company's commitment to fulfilling its debt obligations. By maintaining this fund, the company can manage its liabilities more effectively and enhance investor confidence.
Which Indian companies have recently issued debentures?
recently which industry/company had issued its debentures
Which Indian companies recently issued debentures?
recently which industry/company had issued its debentures
Can private company issue debentures?
YES!
Can public company issue debentures?
Yes
When to create a Debenture Redemption Reserve?
Most companies retire debentures by issuing another set of debentures, hence, most companies don't park funds for retiring debentures by creating any fund. The bond market will surely get affected negatively by such a move of the ministry of corporate affairs. Section 117C of the Companies Act, 1956, requires every company issuing debentures to create a debenture redemption reserve (DRR) for the redemption of such debentures and transfer an 'adequate' amount from its profits every year to such DRR until the issued debentures are redeemed. Hence, every issue of redeemable debentures requires creation of a DRR. The said Section, however, does not provide the meaning of the word 'adequate'. In the year 2002, the ministry of corporate affairs (MCA) issued a circular clarifying the meaning of 'adequate' and provided the percentage which is mandatorily required to be transferred to DRR by certain class of companies. However, to develop the bonds market, MCA issued another clarification circular on 11 February 2013 (Circular 2013)
