1.
The company secretary should take certain
precautions while corresponding with
debentureholders. Justify
2. Which are the precautions to be taken by the
Secretary while corresponding with debentureholders ?
3. Which precautions are to be taken by the Secretary
while corresponding with members ?
Precautions for the Secretary when Corresponding with Debentureholders:
• Accuracy: Ensure that all information, like interest rates or repayment dates, is accurate and
clear.
• Con dentiality: Maintain the privacy of debentureholders' details and any sensitive
company information.
• Compliance: Follow company policies and legal regulations related to debentures.
• Clarity: Use simple and clear language so debentureholders can easily understand the
message.
• Record Keeping: Keep proper records of all correspondence for future reference.
1. What are the circumstances under which
correspondence can be made with debentureholders ?
2. There are certain circumstances when a secretary
has to correspond with debentureholders.
Circumstances for Corresponding with Debentureholders:
• Payment of Interest: Inform them about interest payments or changes in interest rates.
• Redemption of Debentures: Notify them when the company is redeeming (paying back)
debentures.
• Company Changes: Update them on important company events, like mergers,
restructuring, or nancial updates.
• Meetings or Voting: Inform them about meetings or voting rights on issues affecting
debentures.
• Regulatory Compliance: Correspond when legally required, such as ling updates or
nancial reports.
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1. Draft a letter of allotment to debentureholder.
2. Write a letter to the debentureholder regarding
payment of interest through Interest Warrant.
3. Draft a letter to debentureholder informing him
about redemption of debentures.
4. Write a letter to debentureholder informing him
about conversion of debentures into equity shares.
5. Write a letter to the debentureholder regarding
payment of interest electronically.
[Company Name]
[Company Address]
[City, Zip Code]
[Date]
[Debentureholder’s Name]
[Debentureholder’s Address]
[City, Zip Code]
Dear [Debentureholder’s Name],
Subject: [Subject Matter – Allotment/Interest Payment/Redemption/Conversion]
We are pleased to inform you about [mention the speci c purpose of the letter, e.g., allotment of
debentures, payment of interest, redemption of debentures, or conversion of debentures into equity
shares].
1. Allotment of Debentures:
We are pleased to allot you [number] debentures of [company name] at [issue price]. Kindly nd
enclosed the debenture certi cate for your records.
2. Payment of Interest:
We are writing to inform you that the interest due on your debentures for the period [mention the
period] has been processed. The interest amount of [amount] has been [enclosed via interest
warrant/credited electronically to your bank account]. If you have not received the interest, please
contact us.
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3. Redemption of Debentures:
We wish to inform you that the debentures held by you, with certi cate number [certi cate
number], are due for redemption on [redemption date]. The redemption amount will be paid to you
on the said date.
4. Conversion into Equity Shares:
We would like to inform you that as per the terms of the debenture issuance, your debentures are
now eligible for conversion into equity shares of [company name]. Kindly nd the enclosed details
regarding the conversion process.
We thank you for your continued support and trust in [company name]. Should you have any
queries or require further assistance, please do not hesitate to contact us at [contact details].
Yours sincerely,
[Name of the Secretary]
[Designation]
[Company Name]
[Contact Information]
(2) What are the circumstances under which Secretary
undertakes correspondence with
members ?
2. There are certain circumstances when a Secretary has to
correspond with members. Justify
Here are the main reasons the company secretary might write to members (shareholders):
1. Meeting Notices:
• To inform members about Annual General Meetings (AGMs) or special meetings and their
agenda.
2. Dividends:
• To notify members about the payment of dividends and how and when they will receive
them.
3. New Shares:
• To send letters about the allotment of new shares, rights issues, or bonus shares.
4. Transfer of Shares:
• To handle correspondence when shares are transferred or inherited.
5. Annual Reports:
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• To send the company’s annual report and nancial statements to members.
6. Member Rights:
• To inform members about any updates on their rights or changes to the terms of their shares.
7. Compliance:
• To request members update their contact or bank details for regulatory purposes.
8. Responding to Queries:
• To address questions or complaints from shareholders.
9. Corporate Changes:
• To inform members about major company changes like mergers or restructuring.
10. Voting:
• To send proxy forms or instructions for voting on important company decisions.
1. Write a letter to the shareholder regarding issue of
Bonus Shares.
2. Write a letter to the member for the issue of Share
Certi cate.
3. Write a letter to the member for the payment of
dividend through Dividend Warrant. 4. Write a letter to
the member for the payment of Interim dividend
electronically.
5. Draft a reply letter resolving the query of the member
on low rate of dividend.
[Company Name]
[Company Address]
[City, Zip Code]
[Date]
[Member’s Name]
[Member’s Address]
[City, Zip Code]
Dear [Member’s Name],
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Subject: [Subject Matter – Bonus Shares/Share Certi cate/Dividend Payment/
Interim Dividend/Dividend Query]
We are pleased to inform you about [the speci c purpose of the letter, e.g., the issue of bonus
shares, the issue of a share certi cate, payment of dividend, or response to your query regarding
dividends].
1. Issue of Bonus Shares:
We are pleased to announce that [company name] has approved the issuance of bonus shares at the
ratio of [mention ratio]. As a result, you have been allotted [number] bonus shares. These shares
will be credited to your account shortly. Kindly nd the details enclosed.
2. Issue of Share Certi cate:
We are writing to inform you that the share certi cate for your recent allotment of [number] shares
has been issued. Please nd the enclosed share certi cate for your records.
3. Payment of Dividend through Dividend Warrant:
We are happy to inform you that the dividend for the period [mention period] has been declared. A
dividend warrant for an amount of [amount] is enclosed with this letter for your convenience.
4. Payment of Interim Dividend Electronically:
We are pleased to inform you that the interim dividend for the period [mention period] has been
credited electronically to your bank account. If you have not received the amount, kindly contact
our of ce for assistance.
5. Response to Query on Low Dividend Rate:
We have received your query regarding the dividend rate. The dividend declared is based on the
company’s nancial performance and future business requirements. We strive to maintain a balance
between rewarding our shareholders and retaining capital for growth. We appreciate your
understanding and continued trust in the company.
Thank you for your continued support. Should you have any further questions, please feel free to
contact us at [contact information].
Yours sincerely,
[Name of the Secretary]
[Designation]
[Company Name]
[Contact Information]
1. Brie y explain the provisions of Companies Act, 2013
for issue of debentures.
2. State any four provisions of Companies Act 2013 for
issue of debentures.
Provisions of the Companies Act, 2013 regarding the issue of debentures:
1. Types of Debentures:
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◦ A company can issue secured or unsecured debentures. Secured debentures must be
backed by the company’s assets.
2. No Voting Rights:
◦ Debenture holders do not have voting rights in the company’s general meetings,
unlike shareholders.
3. Redemption Period:
◦ Debentures must be redeemed within a maximum period of 10 years from the date
of issue. However, infrastructure companies may have a redemption period of up to
30 years.
4. Debenture Trustees:
◦ If a company issues secured debentures, it must appoint a Debenture Trustee to
protect the interests of debenture holders.
5. Creation of Debenture Redemption Reserve (DRR):
◦ Companies must create a Debenture Redemption Reserve (DRR) for secured
debentures to ensure the repayment of debenture liabilities. The reserve is used to
repay debenture holders upon redemption.
These provisions ensure that debenture holders are protected, and companies follow the proper
procedures when issuing debentures.
1. A company has to create charge on its assets for
issuing secured debentures.
When a company issues secured debentures, it is essentially borrowing money from investors and
promising to repay it with interest. To provide security to debenture holders, the company creates a
charge on its assets. This means that certain assets of the company are pledged as collateral. If the
company fails to repay the debentures, the debenture holders can claim these assets to recover their
money.
This charge provides additional safety to investors, assuring them that their investment is backed by
the company’s assets, reducing the risk of loss in case of default.
1. Explain brie y the procedure for issue of debentures.
Procedure for issuing debentures:
1. Board Approval:
• The company’s board meets and approves the decision to issue debentures. They decide on
important details like the amount, interest rate, and type (secured or unsecured).
2. Appoint Debenture Trustee (If Secured):
• If the debentures are secured, the company must appoint a Debenture Trustee to safeguard
the interests of the debenture holders.
3. Create Security (If Secured):
• For secured debentures, the company must pledge some of its assets as security. This charge
on assets is registered with the Registrar of Companies (RoC).
4. Shareholders’ Approval:
• The company needs approval from shareholders, especially if issuing secured debentures.
This is done by passing a special resolution in a general meeting.
5. Issue Offer Letter:
• The company sends out an offer letter to potential investors, giving details like the interest
rate, repayment terms, and security offered.
6. Allot Debentures:
• Investors apply for the debentures. Once the company approves, it issues debenture
certi cates or credits the debentures in their demat accounts.
7. Create Debenture Reserve:
• The company sets aside money in a Debenture Redemption Reserve (DRR) to ensure it
can repay the debentures at maturity.
This process helps ensure the debentures are issued in a legal and transparent way, protecting both
the company and investors.
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