1.
A joint stock company can issue debentures at any time.
2.
Debentures can be issued by public company as well as by
private company. Private company after securing certificate of incorporation
can issue debentures. Public company has to obtain Trading Certificate for the
issue of Debentures.
3.
As per section 292(1)
the board of Directors has the power to issue debentures. The power must be
exercised by means of resolution passed in the Board Meeting.
4.
A company cannot borrow money exceeding the aggregate of the
paid capital of the company and its free reserves. As pre section 293 (1) the Act empowers Board of
Directors to raise excess money with the consent of members in general meeting.
The Articles of Association should specify the maximum amount that company can
borrow.
5.
According to the companies Act, company cannot issue
debentures carrying voting rights.
6.
Debentures can be issued at par or at premium or even at a
discount. They may be issued through prospectus or private arrangement.
7.
Companies (amendment)
Act, 2000 prohibits issue of unsecured debentures. Now companies can issue
only secured debentures.
