Process of Debenture redemption

[Isha Riwal]

Hello, 

Can anyone share the process/documents for redemption of debentures which are not convertible. 

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Regards, 

CS Isha J. Riwal

[SURENDER HARSH]

Process for Redemption of Non-Convertible Debentures (NCDs)

1. Verify Terms of Issue

• Review the Debenture Trust Deed and the Offer Document/Prospectus for redemption terms, including:
  • Redemption date.
  • Mode of redemption (lump sum or in installments).
  • Payment terms (principal and interest).

2. Notify Debenture Holders

• Notify debenture holders about the upcoming redemption at least 30 days before the redemption date.
• Include details like:
  • Redemption date.
  • Amount payable (principal + interest).
  • Mode of payment.

3. Arrange Funds for Redemption

• Ensure sufficient funds are available for redemption in compliance with Section 71 of the Companies Act, 2013, and relevant Reserve Bank of India (RBI) or Securities and Exchange Board of India (SEBI) regulations, if applicable.
• Maintain these funds in a separate bank account.

4. Pass a Board Resolution

• Hold a board meeting and pass a resolution approving the redemption of NCDs and arranging for payment to debenture holders.

5. Intimate Debenture Trustee

• Inform the Debenture Trustee of the proposed redemption, providing the following:
  • Redemption schedule.
  • Proof of fund availability.
  • Certificate from the statutory auditor confirming the adequacy of funds.

6. Make Payments to Debenture Holders

• Pay the redemption proceeds to the debenture holders on the due date through banking channels (RTGS/NEFT/cheque).
• Obtain acknowledgments or payment confirmations.

7. Cancel Debenture Certificates

• If the debentures are held in physical form, collect and cancel the debenture certificates upon redemption.
• If held in dematerialized form, update the records with the Depository Participant.

8. File Necessary Forms with ROC

• File e-Form CHG-4 for satisfaction of charge (if applicable).
• File e-Form PAS-3 if the debentures were issued as part of a private placement offer and the redemption constitutes the closure of such issuance.

9. Update Register of Debenture Holders

• Update the Register of Debenture Holders to reflect the redemption.

10. Compliance Reporting

• Submit compliance reports to the Debenture Trustee (if applicable).
• Inform SEBI or RBI in case the company is a listed entity or regulated by them.

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Documents Required

For Redemption Process

1. Board Resolution approving the redemption.
2. Notice to Debenture Holders (communication of redemption details).
3. Auditor's Certificate confirming the availability of funds for redemption.
4. Intimation to Debenture Trustee, including:
   • Details of redemption.
   • Fund confirmation.
5. Payment Proofs (RTGS/NEFT/cheque acknowledgments).
6. Debenture Certificates (for physical form debentures) for cancellation.

For ROC Filing

1. e-Form CHG-4: Satisfaction of charge (if applicable).
   • Copy of trust deed or debenture issuance document.
   • Evidence of redemption.
2. e-Form PAS-3: For updating return of allotment closure.
   • Auditor’s certificate for fund utilization.

For Listed NCDs

1. Intimation to Stock Exchange(s) regarding redemption details.
2. Compliance certificates as per SEBI regulations.

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Thanks & Regards 

CS SURENDER KUMAR HARSH 

FCS, MBA (FINANCE), DLM, DIM, M.COM. ,TRADEMARK ATTORNEY,

S.K.HARSH & ASSOCIATES (UNIQUE ID - (S2014RJ2642000)

COMPANY SECRETARY IN PRACTICE  (F10229)

(PEER REVIEWED FIRM( PRC NO. 2691/2022)

Past Chairman Bikaner Chapter NIRC of ICSI

IST FLOOR VED MARKET RANI BAZAAR, 

BIKANER RAJASTHAN-334001

98291-61417, 85030-11417 

Email id :- cssk...@gmail.com, pcs.s...@gmail.com

Web :www.skharshassociates.com

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[Isha Riwal]

Thank you so much sir. 

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