“Bond/ Debenture trustee” means a trustee appointed in respect of any issuance of bonds and debentures (NCDs). The debenture trustee shall enter into an agreement with the issuer before the opening of the subscription list for issuance of bonds/ debentures, which shall have the understanding in relation to allocation of duties and responsibilities and other relevant details. Bond/ Debenture Trustee ensures the protection of the interest of bond/ debenture holders by the creation of stipulated security and continuance thereof and its enforcement for the benefit of the bond/ debenture holders. It also complies with regulatory and statutory requirements. We are the first trusteeship company to be registered as a Bond/ Debenture Trustee in GIFT City. All the bonds created in GIFT City needs to be listed on IGX.
Applicable Regulations:
- IFSCA Issue and Listing Regulations, 2021
- IFSCA Capital Market intermediaries Regulations, 2021
Appointment of Trustee is mandatory for public issuance as per IFSCA Issue and Listing Regulations, 2021
Our Role and Responsibilities as a Bond/ Debenture Trustee:
- Appointment and Acceptance: Enter into an agreement with the issuer covering duties, responsibilities, and other details before subscriptions open and accepting the trust deed containing standard and issue-specific information without prejudicial covenants.
- Prospectus Review: Ensuring the prospectus aligns with the debenture terms and trust deed.
- Monitoring and Oversight: Calling for periodic reports from the issuer within 7 days of board meetings or 45 days of quarter end, monitor fund utilization reports, notify debenture holders of defaults in interest, redemption or security creation and appoint a nominee director after two interest defaults or one security/redemption default.
- Security and Covenants: Confirm the issuer does not breach debenture terms or trust deed covenants, ensure conditions are met for security creation, redemption reserves and recovery funds and verify issuer and guarantor assets sufficiently cover principal and interest without unauthorized encumbrances.
- Enforcement and Protection: Take necessary steps to enforce security and protect debenture holders’ interests, convene debenture holder meetings when required.
- Conversion and Redemption: Confirm proper conversion or redemption as per the issue terms.
- Possession and Administration: Take possession of trust property as per trust deed and to ensure that the debentures are credited to holder’s demat accounts.
- Payment and Breach Reporting: Confirming interest payments and redemption monies are distributed on time and report any trust deed or regulatory breaches to the Authority.
- Due Diligence: Independently verify security is free of encumbrances or obtain consent before creating a charge.
- Transition Arrangements: Not relinquish the assignment until replaced by the issuer appointing a new trustee