Truestees of debentures trust
This query is : Resolved
10 April 2013
Dear experts
Can Directors be the trustees of the trust created for issue of debentures??
Kindly help, it is an urgent requirement
Thank you
Venkatesh Duvvuri
Chartered Accountant
Dear experts
Can Directors be the trustees of the trust created for issue of debentures??
Kindly help, it is an urgent requirement
Thank you
Venkatesh Duvvuri
Chartered Accountant
10 April 2013
Hi
As per Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993 Eligibility for being debenture trustee.
Regulation 7: No person shall be entitled to act as a debenture trustee unless he is either—
(a) a scheduled bank carrying on commercial activity; or
(b) a public financial institution within the meaning of section 4A of the Companies Act, 1956; or
(c) an insurance company; or
(d) body corporate.
As per above, an Individual can not become a trustee.
As per Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993 Eligibility for being debenture trustee.
Regulation 7: No person shall be entitled to act as a debenture trustee unless he is either—
(a) a scheduled bank carrying on commercial activity; or
(b) a public financial institution within the meaning of section 4A of the Companies Act, 1956; or
(c) an insurance company; or
(d) body corporate.
As per above, an Individual can not become a trustee.
15 April 2013
Thank you sir,
But sir ours is private company, in that case also individual cannot be trustees?
But sir ours is private company, in that case also individual cannot be trustees?
02 August 2025
Good question! Here’s the clarification regarding **trustees of debenture trust for private companies** in India:
---
### Can Directors be Trustees of Debenture Trust?
**As per SEBI (Debenture Trustees) Regulations, 1993:**
* A **debenture trustee must be a scheduled bank, public financial institution, insurance company, or a body corporate** (Regulation 7).
* **An individual (including directors) cannot act as debenture trustee.**
---
### What about Private Companies?
* The SEBI regulations primarily apply to **listed companies** or companies that issue debentures to the public.
* For a **private company issuing debentures privately** (not to the public), SEBI regulations do **not apply** directly.
* In such cases, the debenture trust deed is generally governed by **contractual terms** between the company and debenture holders.
* There is **no statutory requirement** to appoint a professional trustee under SEBI regulations for private placements.
* Hence, **directors or individuals can act as trustees** if mutually agreed, **unless restricted by the company’s articles or debenture trust deed.**
---
### Summary:
| Situation | Trustee Eligibility |
| -------------------------------------------- | ----------------------------------------------------------------------------- |
| Public/Listed Company issuing debentures | Trustee must be entity as per SEBI regulations (no individual directors) |
| Private Company issuing debentures privately | No statutory restriction; directors/individuals can act as trustees if agreed |
---
### Practical Advice:
* For **private companies**, clarify trustee roles in the debenture trust deed.
* If public issuance is planned later, appoint a professional trustee as per SEBI rules.
* Avoid conflict of interest if directors act as trustees.
---
If you want, I can help draft a trustee clause or trust deed sample for your private company’s debentures. Would you like that?
---
### Can Directors be Trustees of Debenture Trust?
**As per SEBI (Debenture Trustees) Regulations, 1993:**
* A **debenture trustee must be a scheduled bank, public financial institution, insurance company, or a body corporate** (Regulation 7).
* **An individual (including directors) cannot act as debenture trustee.**
---
### What about Private Companies?
* The SEBI regulations primarily apply to **listed companies** or companies that issue debentures to the public.
* For a **private company issuing debentures privately** (not to the public), SEBI regulations do **not apply** directly.
* In such cases, the debenture trust deed is generally governed by **contractual terms** between the company and debenture holders.
* There is **no statutory requirement** to appoint a professional trustee under SEBI regulations for private placements.
* Hence, **directors or individuals can act as trustees** if mutually agreed, **unless restricted by the company’s articles or debenture trust deed.**
---
### Summary:
| Situation | Trustee Eligibility |
| -------------------------------------------- | ----------------------------------------------------------------------------- |
| Public/Listed Company issuing debentures | Trustee must be entity as per SEBI regulations (no individual directors) |
| Private Company issuing debentures privately | No statutory restriction; directors/individuals can act as trustees if agreed |
---
### Practical Advice:
* For **private companies**, clarify trustee roles in the debenture trust deed.
* If public issuance is planned later, appoint a professional trustee as per SEBI rules.
* Avoid conflict of interest if directors act as trustees.
---
If you want, I can help draft a trustee clause or trust deed sample for your private company’s debentures. Would you like that?
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