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

 

Debentures, which are issued by bodies corporate, may be secured/unsecured and:

 

Convertible, (optional/compulsory) whether fully or partly;

Non-convertible

 

Debenture trustee is required to monitor the creation/perfection of security and servicing of debentures. The debenture trustee is also required to undertake enforcement of security in the interest of the holders of the debentures upon their instructions and also carrying out such other acts as are necessary for the protection of the interests of the debenture holders, and, to do all things necessary in order to resolve the grievances of the debenture holders.

 

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

• Managing bank account for servicing of payments to debenture holders

• Monitoring of security cover ratio/other covenants as required under the terms of the transaction

• Daily valuation and monitoring of listed shares, sending reports, issue notices (top-up/top-down), etc.

• Issuance of NOC's/Pari Passu letters

• Assistance in enforcement of security in case of default