E T B Best PGDM Institute in Delhi PGDM Course in Delhi MBA AGU Best PGDM College in Delhi NCR Best MBA Colleges in Bangalore Best School in Noida Top Boarding School in Noida Top Boarding School in Delhi

Sir what is the last date of making debenture redemption investment?

Suppose debentures are redeemable on April 20,2016 what would
be date of making investment. I ve been told by my teacher that last date
of doing it is April 30 and so he told me that you have to put date April 30,2015.
Sir my query is that can't we make investment on any date before April 20,2016
as it before April 30,2016 only.

asked Aug 1, 2016 in Company Accounts-Accounting for Debentures by abhi (4 points) 320 views

1 Answer

0 votes

Rule 18(7) of the Companies (Share Capital and Debentures) Rules, 2014 requires the companies creating DRR to deposit or invest  on or before 30th April an amount at least equal to 15% of the debentures to be redeemed up to 31st March of the next year in specified securities. 

So if debentures are to be redeemed on April 20, 2016, then the company must invest or deposit in specified securities a sum at least equal to 15% of the nominal value of debentures to be redeemed either before or on 30th April, 2015.  It is clear that last date for making investment is 30th April but definitely investment can be made on any date before 30th Arpril.  In any question if date of investment is not given, then it will be most appropriate if put 30th April, as the date of investment.

answered Aug 1, 2016 by jbsclasses (3,971 points)
Sir but the investments should be made in the current
Accounting period that is only after March 31,2016

I am reproducing below page 77 of the Chapter IV- Companies (Share Capital and Debentures) Rules 2014 given at http://www.mca.gov.in/Ministry/pdf/NCARules_Chapter4.pdf

In the para 7 (c) the words used are 'on or before 30th day of April in each year, invest or deposit, as the case may be, a sum which shall not be less than fifteen percent, of the amount of its debentures maturing during the year ending on the 31st day of March of the next year, in any ..........  Here mark the word year.  Here 'year' means 'Financial Year' which starts on 1st April and ends on 31st March.

My interpretation is that we must make investment before 30th April of the financial year ending 31st March, 2015 for debentures maturing during the next financial year ending 31st March, 2016.

Basically your doubt is arising because you are treat 'year' as a calender year while I am interpreting it as a 'financial year'.  Moreover, what is the point in making investments a few days before the redemption.  I think the intention of law is to keep separate at least 15% of the amount of debentures to be redeemed at least 11 months before the actual redemption.  It will help the company in organising its resources for redemption.

OK sir thanks a lot for clearing my confusion.