Service Details
Debenture Trustee (Unlisted)
A Debenture Trustee is defined as a trustee under a written trustee appointment agreement /deed for the purpose of securing any issue of debentures by a body corporate (the Issuer). Debenture trusteeship involves taking possession of the assets/property being offered as security for securing the debentures issued by the body corporate.
Debenture Trusteeship essentially covers acting as trustees for debt instruments issued by a body corporate. Such debt instruments broadly fall into two categories namely Debentures & Bonds
Scope of Service
- Vetting of Debenture Trust Deed (DTD), Debenture Trustee Agreement (DTA) and/or charge creation security documents
- Monitor creation & perfection of security within stipulated time and hold it for debenture holders
- Monitoring of security cover ratio/other covenants as required under the terms of the transaction
- Issuance of NOC's/Pari Passu letters
- Assistance in enforcement of security in case of default
Debenture Trustee (Unlisted) FAQs
1. What is the role of a Debenture Trustee?
A Debenture Trustee safeguards the interests of debenture holders by monitoring compliance with the terms of the issue and ensuring timely payment of interest and principal.
2. Why is appointing a Debenture Trustee mandatory?
SEBI mandates the appointment of a registered Debenture Trustee for public issue or private placement of listed debentures to ensure investor protection and transparency.
3. What are the key responsibilities of a Debenture Trustee?
They include monitoring asset cover, ensuring compliance with covenants, and acting in case of default or breach of debenture trust deed terms.
4. How does a Debenture Trustee protect investor interests?
By ensuring issuers adhere to repayment schedules, maintaining adequate security, and initiating enforcement measures if necessary.
5. Can a Debenture Trustee act for both listed and unlisted debentures?
Yes, provided the trustee is SEBI-registered and the appointment complies with applicable regulations.
6. What documents are required to appoint a Debenture Trustee?
Documents include the Debenture Trust Deed, Information Memorandum/Offer Document, Board Resolution, Security Documents, and necessary declarations from the issuer.
7. How does MITCON Credentia add value as a Debenture Trustee?
Through proactive monitoring, transparent reporting, and expertise in handling complex structured finance instruments.
8. How are debenture holders kept informed?
The trustee provides regular updates and disclosures on compliance, asset status, and security cover position through reports and regulatory filings.
9. What happens if the issuer defaults?
The Debenture Trustee takes appropriate enforcement actions invoking security, recovery proceedings, or restructuring under legal provisions.
10. Is there a limit on the number of debenture issues a trustee can handle?
There’s no statutory cap, but trustees ensure adequate resources and risk management for each issue they manage.
