Explain the following term / concept : Debenture Trust Deed

Answer: A debenture trust deed is a document executed between the company and the debenture trustee, setting out the terms of issue of debentures and the rights of debenture holders.

• It must be executed when secured debentures are issued (and the trustee is compulsory when the offer is made to the public or to the members exceeding 500), within 60 days of allotment of debentures, in Form SH-12.
• It contains details such as the amount and rate of interest, the assets charged as security, the date and mode of redemption, the powers and duties of the trustee and the events of default.
• It protects the interests of debenture holders, as the trustee can take action against the company on default.