Issue of debenture
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
30 July 2012
Dear Experts,
Can any Pvt. Ltd company can issue debenture to its members or relatives without security? (acting as deposit)If yes, what are the procedures to do so?
Regards,
Indra
Can any Pvt. Ltd company can issue debenture to its members or relatives without security? (acting as deposit)If yes, what are the procedures to do so?
Regards,
Indra
31 July 2012
Hi
1. Deposits in case of Private Limited Company
Private Company is prohibited to accept any invitation or acceptance of unsecured loans/deposits from the persons other than its members, directors or their relatives. Therefore a private company can accept deposits through private arrangement from its members, directors and their relatives.
Rule 2(b)(ix) exempt any unsecured loan money received from directors and shareholders from the definition of deposits. According to Rule 2(b)(ix), any amount received from members of a private company limited by guarantee are not exempt.
Rule 3 of Companies (Acceptance of Deposits) Rules, 1975 deal with the limit upto which a company can accept deposits/ loans. Private company exempted this limit.
For any invitation and acceptance of unsecured loan/deposits from relatives of directors and member, the company will have to file a statement in lieu of advertisement in accordance with the provisions of Rule 4A of the Companies (Acceptance of Deposits) Rules, 1975. The company will also have to file annual return of deposits in accordance with Rule 10.
2. Consequences of acceptance of deposit by Private Limited Company
If a private company acceptance an amount, which may be classified as deposit under section 58A read with Companies (Acceptance of Deposits) Rules, 1975, it will cease its status of a private company and has to make all the compliances for such deposits as per the requirement of said rules, as well as to comply with all the provisions as may be applicable on public limited company such as section 58A, 58AA, 58AAA, 81, 256, 257, 198, 268, 269, Schedule XIII, 274(i)(g), 295, 297, 300, 301, 372A, etc
Regards
1. Deposits in case of Private Limited Company
Private Company is prohibited to accept any invitation or acceptance of unsecured loans/deposits from the persons other than its members, directors or their relatives. Therefore a private company can accept deposits through private arrangement from its members, directors and their relatives.
Rule 2(b)(ix) exempt any unsecured loan money received from directors and shareholders from the definition of deposits. According to Rule 2(b)(ix), any amount received from members of a private company limited by guarantee are not exempt.
Rule 3 of Companies (Acceptance of Deposits) Rules, 1975 deal with the limit upto which a company can accept deposits/ loans. Private company exempted this limit.
For any invitation and acceptance of unsecured loan/deposits from relatives of directors and member, the company will have to file a statement in lieu of advertisement in accordance with the provisions of Rule 4A of the Companies (Acceptance of Deposits) Rules, 1975. The company will also have to file annual return of deposits in accordance with Rule 10.
2. Consequences of acceptance of deposit by Private Limited Company
If a private company acceptance an amount, which may be classified as deposit under section 58A read with Companies (Acceptance of Deposits) Rules, 1975, it will cease its status of a private company and has to make all the compliances for such deposits as per the requirement of said rules, as well as to comply with all the provisions as may be applicable on public limited company such as section 58A, 58AA, 58AAA, 81, 256, 257, 198, 268, 269, Schedule XIII, 274(i)(g), 295, 297, 300, 301, 372A, etc
Regards
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 August 2012
THANKS, THANKS A LOT
Querist : Anonymous
Querist :
Anonymous
(Querist)
04 August 2012
Dear Sir,
For any means ROC can be a matter for issuing Debenture for a Pvt. or Public Ltd.
Indranath
For any means ROC can be a matter for issuing Debenture for a Pvt. or Public Ltd.
Indranath
02 August 2024
Yes, the Registrar of Companies (ROC) plays a crucial role in the issuance of debentures for both private and public limited companies in India. Here’s an outline of how the ROC is involved in the process of issuing debentures:
### **1. Regulatory Compliance:**
- **Debenture Issuance Guidelines:** Both private and public companies must comply with the regulations set forth in the Companies Act, 2013 and the relevant rules thereunder. These regulations include the procedure for issuing debentures, ensuring compliance with disclosure requirements, and adhering to statutory limits on borrowing.
### **2. Private Limited Companies:**
- **Private Placement:** Private companies often issue debentures through a private placement process. The issuance needs to comply with the provisions of the Companies Act, 2013 related to private placements. The company must file a return of allotment with the ROC in Form PAS-3.
- **Documentation:** The company needs to maintain proper records and file the necessary documents with the ROC, including the resolution passed by the board of directors or the general meeting, the offer letter, and the return of allotment.
### **3. Public Limited Companies:**
- **Public Issue:** Public companies can issue debentures through a public issue, which is subject to more stringent regulatory requirements. This process involves issuing a prospectus and obtaining approval from the Securities and Exchange Board of India (SEBI) in addition to ROC compliance.
- **Prospectus and Disclosure:** The company must issue a prospectus detailing the terms of the debentures and comply with disclosure requirements. The ROC needs to be informed of the issue through various forms and documentation.
- **Filing Requirements:** For public debenture issues, companies must file forms such as Form 10, Form 12, and others as specified by the Companies Act, 2013 and SEBI regulations.
### **4. ROC Filing Requirements:**
- **Form 10:** This form is used to issue debentures and includes details about the issuance and the debenture holders.
- **Form 12:** Used for the creation of charges on debentures.
- **Form CHG-9:** Required for registration of charges created on debentures.
- **Form PAS-3:** For private companies, this form is used to file the return of allotment of debentures.
### **5. Statutory Compliance:**
- **Charge Creation:** When debentures are issued, a charge on the assets of the company may need to be registered with the ROC. This involves filing Form CHG-9 or other relevant forms to register the charge.
- **Debenture Trust Deed:** A debenture trust deed must be executed and filed with the ROC. This document outlines the terms and conditions of the debentures and the rights and obligations of the debenture holders.
### **6. ROC’s Role:**
- **Approval and Filing:** The ROC is responsible for approving the registration of charges and ensuring compliance with the Companies Act. It also monitors adherence to regulatory requirements and maintains records of all debenture issuances.
- **Inspection and Compliance:** The ROC may inspect compliance with the regulatory framework and take action if there are violations or non-compliance issues.
### **Summary:**
The ROC is involved in the debenture issuance process by ensuring that companies adhere to the regulatory requirements for issuing debentures. This includes the proper filing of documents, registration of charges, and compliance with the Companies Act, 2013. Both private and public companies must follow these procedures to ensure that their debenture issuance is legally compliant and properly recorded.
### **1. Regulatory Compliance:**
- **Debenture Issuance Guidelines:** Both private and public companies must comply with the regulations set forth in the Companies Act, 2013 and the relevant rules thereunder. These regulations include the procedure for issuing debentures, ensuring compliance with disclosure requirements, and adhering to statutory limits on borrowing.
### **2. Private Limited Companies:**
- **Private Placement:** Private companies often issue debentures through a private placement process. The issuance needs to comply with the provisions of the Companies Act, 2013 related to private placements. The company must file a return of allotment with the ROC in Form PAS-3.
- **Documentation:** The company needs to maintain proper records and file the necessary documents with the ROC, including the resolution passed by the board of directors or the general meeting, the offer letter, and the return of allotment.
### **3. Public Limited Companies:**
- **Public Issue:** Public companies can issue debentures through a public issue, which is subject to more stringent regulatory requirements. This process involves issuing a prospectus and obtaining approval from the Securities and Exchange Board of India (SEBI) in addition to ROC compliance.
- **Prospectus and Disclosure:** The company must issue a prospectus detailing the terms of the debentures and comply with disclosure requirements. The ROC needs to be informed of the issue through various forms and documentation.
- **Filing Requirements:** For public debenture issues, companies must file forms such as Form 10, Form 12, and others as specified by the Companies Act, 2013 and SEBI regulations.
### **4. ROC Filing Requirements:**
- **Form 10:** This form is used to issue debentures and includes details about the issuance and the debenture holders.
- **Form 12:** Used for the creation of charges on debentures.
- **Form CHG-9:** Required for registration of charges created on debentures.
- **Form PAS-3:** For private companies, this form is used to file the return of allotment of debentures.
### **5. Statutory Compliance:**
- **Charge Creation:** When debentures are issued, a charge on the assets of the company may need to be registered with the ROC. This involves filing Form CHG-9 or other relevant forms to register the charge.
- **Debenture Trust Deed:** A debenture trust deed must be executed and filed with the ROC. This document outlines the terms and conditions of the debentures and the rights and obligations of the debenture holders.
### **6. ROC’s Role:**
- **Approval and Filing:** The ROC is responsible for approving the registration of charges and ensuring compliance with the Companies Act. It also monitors adherence to regulatory requirements and maintains records of all debenture issuances.
- **Inspection and Compliance:** The ROC may inspect compliance with the regulatory framework and take action if there are violations or non-compliance issues.
### **Summary:**
The ROC is involved in the debenture issuance process by ensuring that companies adhere to the regulatory requirements for issuing debentures. This includes the proper filing of documents, registration of charges, and compliance with the Companies Act, 2013. Both private and public companies must follow these procedures to ensure that their debenture issuance is legally compliant and properly recorded.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Selecting Tax Regime while for calculating tax relief on under Section89 of income tax act 1961.
- Relief Calculation u/s 89 of ITax 1961 in TableA Form10E
- Cloud service
- Accounting Policies changes
- GST ON FOREIGN CLIENT
- Can we issue an invoice today
- SALE OF GOODS FROM OTHER STATE
- Applicability of RCM on Frieght Inward supplies received from un-registered person
- GST on Fresh Juice Center(Sugarcane)
- Sale of Gold ornaments
- Forgot to update debit note in gst
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- Regarding Advance Tax not claimed in the Return of Income for A.Y. 2025-26
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
- Updated return in budget 2026
- Clarification Required on GST Rate & HSN Classification – Millet-Based Probiotic Drink
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
