Issue of unsecured debentures

Unsecured debentures do not get the benefit as an exempt deposit under Rule 2(b) (x) of the Companies (Acceptance of Deposits) Rules and are treated as "deposits" under the same.

so does it mean that a private company can issue secured debentures only ? Because a private company cannot accept deposit from outsiders.

Regards

CS Abhay Sharma

Yes, a Private Company can issue secured Debentures to the outsiders and it can  only issue unsecured Debentures to its Shareholders/ Directors and their relatives.

Originally posted by : CS Abhay Sharma
	Dear Learned Members, Secured debentures are excluded from the definition of deposits. So can it be inferred that issue of unsecured debentures will have to comply with depost rules, both by private and public company ? Regards CS Abhay Sharma

Debentures whether secured or unsecured are the loan which is nothing to do with Acceptance of Deposit Rules, 1975.
 

As mentioned in Companies Deposit Rules any amount borrowed by Company is deposit except specifically mentioned in the Rules. As per Rule 2 (b) (x) secured debentures are not deposit but debetures which are not secured comes under the definition of Deposit.