SELECT * FROM question_mgmt as q WHERE id=10817 AND status=1 SELECT id,question_no,question,chapter FROM question_mgmt as q WHERE courseId=3 AND subId=51 AND chapterId=358 and ex_no='2' AND status=1 ORDER BY CAST(question_no AS UNSIGNED)

Question:

Explain the guidelines of SEBI for creating Debenture Redemption Reserve.

Answer:

Securities and Exchange Board of India (SEBI) have provided some guidelines for redemption of debentures.  The focal points of these guidelines are: 

(i) Every company shall create Debenture Redemption Reserve in case of issue of debenture redeemable after a period of more than 18 months from the date of issue. 

(ii) The creation of Debenture Redemption Reserve is obligatory only for non-convertible debentures and non-convertible portion of partly convertible debentures. 

(iii) A company shall create Debenture Redemption Reserve equivalent to at least 50% of the amount of debenture issue before starting the redemption of debenture. 

(iv) Withdrawal from Debenture Redemption Reserve is permissible only after 10% of the debenture liability has already been reduced by the company. 

 

SEBI guidelines would not apply under the following situations: 

(i) Infrastructure company (a company wholly engaged in the business of developing, maintaining and operating infrastructure facilities), and 

(ii) A company issuing debentures with a maturity period of not more than 18 months.


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