top button
Flag Notify
    Connect to us
      Site Registration

Site Registration

What do you understand by redemption of debentures out of capital?

+1 vote
106 views
What do you understand by redemption of debentures out of capital?
posted Jul 18, 2017 by Sagar Sharma

Share this question
Facebook Share Button Twitter Share Button LinkedIn Share Button

1 Answer

0 votes

When the debentures are paid out of current sources of the company, it is known as redemption out of capital. It means no debenture redemption reserve is created by the company. This affects the working capital adversely as per SEBI guidelines this source can be used by the following companies.

(i) Infrastructure companies (a company wholly engaged in the business of developing maintaining and operating infrastructure facilities).

(ii) A company issuing debentures with a maturity period of not more than 18 months.

(iii) A company issue debentures in the form of private placement.

In other words the above companies are not required to create debenture redemption reserve.**

answer Jul 19, 2017 by Durga Prasad
...