Section 71: Debentures

Q: What does Section 71 of The Companies Act, 2013 (CA 2013) deal with?

Section 71 CA 2013 pertains to "Debentures". It is part of the The Companies Act, 2013, a legislation enacted by the Parliament of India. Section 71 of The Companies Act, 2013 (CA 2013) governs debentures.

Q: Is Section 71 CA 2013 still in force?

Yes, Section 71 of the The Companies Act, 2013 is currently in force across the Republic of India.

Q: What is धारा 71 CA 2013?

धारा 71 CA 2013 is the Devanagari Hindi reference for Section 71 of the The Companies Act, 2013. Section 71 of The Companies Act, 2013 (CA 2013) governs debentures.

Q: What is Dhara 71 CA 2013?

Dhara 71 CA 2013 is the Roman Hindi reference for Section 71 of the The Companies Act, 2013. "Dhara" means "Section" in Hindi. Section 71 of The Companies Act, 2013 (CA 2013) governs debentures.

Q: How to cite Section 71 of The Companies Act, 2013?

Cite as: "Section 71, The Companies Act, 2013 (CA 2013)" in legal briefs. For academic writing, use the BlueBook format: The Companies Act, 2013, 2013, § 71 (India).

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(1) A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption:

Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting.

(2) No company shall issue any debentures carrying any voting rights.

(3) Secured debentures may be issued by a company subject to such terms and conditions as may be prescribed.

(4) Where debentures are issued by a company under this section, the company shall create a debenture redemption reserve account out of the profits of the company available for payment of dividend and the amount credited to such account shall not be utilised by the company except for the redemption of debentures.

(5) No company shall issue secured debentures, unless it complies with the conditions as may be prescribed by the Central Government with regard to the creation of a charge on the properties or assets of the company.

(6) Where the company fails to redeem the debentures on the date of their maturity or fails to pay interest thereon, the Tribunal may, on the application of any or all of the debenture holders, or debenture trustee, after hearing the parties concerned, direct, by order, the company to redeem the debentures forthwith on payment of principal and interest due thereon.

(7) If any default is made in complying with the order of the Tribunal under this section, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than two lakh rupees but which may extend to five lakh rupees, or with both.

(8) A contract with the company to take up and pay for any debentures of the company may be enforced by a decree for specific performance.

(9) The Central Government may prescribe the procedure, for securing the issue of debentures, the form of debenture trust deed, the procedure for the debenture holders to inspect the trust deed and to obtain copies thereof, quantum of debenture redemption reserve required to be created and such other matters.

(10) Where a company fails to comply with any of the provisions of this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.