Debenture trustees are appointed by a company issuing debentures.

Answer: The statement is justified.

Debentureholders are creditors who are large in number and scattered; they cannot individually watch over the company or enforce the security. Hence Section 71(5) of the Companies Act, 2013 requires a company to appoint one or more debenture trustees before issuing a prospectus or letter of offer for debentures to the public or to more than 500 members.

• A debenture trust deed is executed between the company and the trustee, setting out the terms of issue and the security.
• The trustee protects the interests of debentureholders and redresses their grievances.
• The trustee ensures that the assets charged are sufficient to discharge the principal and interest, and that the security is properly created and maintained.
• The trustee checks that the company creates the Debenture Redemption Reserve and pays interest and principal on time.
• On default, the trustee can take action, including applying to the Tribunal or enforcing the security.

Thus debenture trustees act as watchdogs on behalf of debentureholders, so their appointment is necessary.