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    Question

    As per Companies Act, a company issuing debentures to

    more than ______ members/public, needs to mandatorily appoint a debenture trustee. 
    A 250 Correct Answer Incorrect Answer
    B 500 Correct Answer Incorrect Answer
    C 1000 Correct Answer Incorrect Answer
    D 2000 Correct Answer Incorrect Answer
    E 5000 Correct Answer Incorrect Answer

    Solution

    Issue of debentures - governed by Section 71 and related Rules like the Companies (Share Capital & Debentures) Rules, 2014: No company shall issue a  prospectus  or make an offer or invitation to the public or to its members  exceeding five hundred for the subscription of its debentures, unless the company has, before such issue or offer, appointed one or more debenture trustees Rules further state: • underwriting commission for debentures is capped at 2.5% of the issue price (compared to 5% for shares). • creating a charge on company assets for secured debentures, and strict disclosures

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