Whenever any Issuer is issuing Debenture / Bonds with a tenure of over 12 months requires to appoint a Professional Debenture Trustee.
A Body Corporate registered with Securities and Exchange Board of India (SEBI) as Debenture Trustee (intermediary) is called Professional Trustee.
Yes, as per SEBI guidelines, minimum requirement of Capital Adequacy to be maintained is Rs. 1.00 Crore (Which is likely to increase to Rs. 2.00 Crore shortly).
As per SEBI guidelines for Debenture Trustee, following are the main defaults:
- Non-issuance of Debentures / Bonds to the applicant in time.
- Non-creation of Security for Debenture / Bond Issue in time.
- Non-payment of Interest on Debentures / Bonds by Issuer.
- Non-payment of Redemption amount of Debentures / Bonds by Issuer.
In Private Placement the number of Investors are restricted and it should be less than 50 whereas there is no restriction on number of investors in any public issue.
Role of Debenture / Bond Trustee is to Create Security on behalf of Debenture / Bond Holders, Enforce the Security in case of default / need and Protect the interest of Debenture / Bond Holders.
Trustee is acting as an interface between Debenture / Bond Issuer and Debenture / Bonds Holders and should support in resolving various grievances / complaints expeditiously as under:
- Non-receipt of Debenture / Bond certificates or Credit of Debenture / Bond in Demat account.
- Non-receipt of Interest.
- Non-receipt of Redemption amount by Debenture / Bond Holders.
To give an exit route and to create Liquidity for Debenture / Bond Holders Issuers are listing their Debentures / Bond Issues on Stock Exchange.