Startup Services · Debentures

Issuance of Debentures raise debt capital with the right structure and compliance.

Debentures let a company raise debt capital from lenders or investors on negotiated terms — convertible, non-convertible, secured, or unsecured — but every issue must follow the approval, security, and disclosure requirements of the Companies Act.

A debenture is a debt instrument issued by a company acknowledging its indebtedness to the holder, typically carrying a fixed rate of interest and a defined repayment or conversion schedule. Companies issue debentures — convertible, non-convertible, secured, or unsecured — to raise capital from lenders, family offices, or NBFCs without diluting equity immediately.

Sections 71 and 179 of the Companies Act 2013, along with the Companies (Share Capital and Debentures) Rules, govern the issue of debentures — requiring board and, in most cases, shareholder approval, creation of a debenture redemption reserve where applicable, appointment of a debenture trustee for secured or listed debentures, and creation of security where the debentures are secured.

At Beyonte Compliances, we assist companies with structuring the debenture issue, drafting the debenture trust deed and subscription agreement, appointing a debenture trustee where required, and completing the allotment, charge registration, and ROC filings.

What Our Debenture Issuance Service Covers

Instrument Structuring

Advising on the type of debenture — convertible, non-convertible, secured, or unsecured — best suited to the transaction.

Board & Shareholder Approval

Preparing resolutions for board approval and, where required, shareholder approval for the borrowing and issue.

Debenture Trustee Appointment

Assisting with appointment of a SEBI-registered debenture trustee where required for secured or listed debentures.

Trust Deed & Documentation

Drafting the debenture trust deed, subscription agreement, and term sheet recording the terms of the issue.

Private Placement Compliance

Managing the Section 42 private placement process for the debenture issue, including Form PAS-4.

Security Creation & Charge Filing

Coordinating creation of security and filing Form CHG-9 with the Registrar of Companies for secured debentures.

Debenture Redemption Reserve

Advising on creation and maintenance of a debenture redemption reserve where mandated for the class of company and debenture.

Allotment & PAS-3 Filing

Filing Form PAS-3 with the Registrar of Companies within 30 days of allotment of the debentures.

Our Process

Structuring the Issue

Finalising the type, tenure, interest rate, and security package for the debenture issue.

Approvals

Obtaining board approval and shareholder approval where the borrowing exceeds prescribed limits.

Documentation

Drafting the trust deed, subscription agreement, and appointing a debenture trustee where required.

Allotment

Allotting the debentures to subscribers following completion of the private placement process.

Charge Registration & Filings

Creating and registering security with the ROC, and filing PAS-3 for the allotment.

Why It Matters

✓Raises debt capital without immediate equity dilution

✓Structured security package protects lenders and improves terms

✓Correct trustee appointment where mandated avoids regulatory action

✓Timely charge registration protects the security interest created

✓Full Section 42 compliance reduces risk of the issue being treated as public

✓Clear trust deed terms reduce disputes on redemption or conversion

✓Correct PAS-3 filing avoids penalty for delayed reporting of allotment

✓End-to-end structuring and execution support for the full transaction

Frequently Asked Questions

A debenture trustee must be appointed whenever a company issues secured debentures to more than 500 investors, or in various other cases prescribed under the rules — it is standard practice to appoint one for most secured and listed debenture issues.

The requirement to create a debenture redemption reserve, and the applicable percentage, depends on the type of company (listed or unlisted, NBFC or otherwise) and the nature of the debentures — some categories are exempted under the current rules.

Shareholder approval by ordinary or special resolution is typically required where the borrowing (including through debentures) exceeds the company's paid-up capital, free reserves, and securities premium, as set out under Section 180.

Security created for secured debentures must be registered with the Registrar of Companies by filing Form CHG-9 within the prescribed timeline from creation of the charge.

Raise debt capital through a compliant debenture issue.

Talk to our team about structuring, documenting, and issuing debentures for your company.