Page 6 - LN ISSUE OF DEB

Before offering the debentures for public subscription a document

regarding the Trust Deed should be created by the company which is
known as Debenture Trust Deed.

The main purpose of appointment of Trustees is to protect the interest of

debenture holders.

Issue of Debentures at Par

When a company issues its debenture at the face value (Original price) it
is known as debenture issued at Par. For example if the Face value of a

Debenture is Rs.1,000 and the issue price of debenture is also Rs.1,000.

Issue of Debentures at Premium

When a company issues its debenture at a price which is more than the

face value (Original price) it is known as debenture issued at Premium.

For example if the Face value of a Debenture is Rs.1,00 and the issue
price of debenture is also Rs.120.

Issue of Debentures on Discount

When a company issues its debenture at a price which is less than the

face value (Original price) it is known as debenture issued at Discount.

For example if the Face value of a Debenture is Rs.100 and the issue price

of debenture is also Rs.95.

Oversubscription of Debentures

When excess applications are received by the company for the

subscription of debentures it is known as oversubscription. In such a case

there are three options available :

• Reject the Excess Applications: in this case directors may reject the

excess applications and excess application money received will be paid

back to the applicants.