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CHAPTER III RESPONSIBILITIES AND OBLIGATIONS OFDEBENTURE TRUSTEES Obligation before appointment as debenture trustees 13. (1) No debenture trustee who has been granted a certificate under regulation 8 shall act as such in respect of each issue of debenture unless - [(a) he enters into a written agreement with the body corporate before the opening of the subscription list for issue of debentures; (b) the agreement under clause (a) shall inter-alia contain: (i) that the debenture trustee has agreed to act as such under the trust deed for securing an issue of debentures for the body corporate; (ii) the time limit within which the security for the debentures shall be created.] ⁴ *[Debenture Trustee not to act for an associate* 13A. No debenture trustee shall act as such for any issue of debentures in case- it is an associate of the body corporate or it has lent or is proposing to lend money to the body corporate. Provided that in respect of debentures issued prior to the commencement of these Regulations, the debenture trustee for such issue shall also comply with this regulation within two years from the commencement of these Regulations.]⁵ Obligation of the debenture trustees 14. Every debenture trustee shall amongst other matters accept the trust deed which contain the matters specified in Schedule IV to the regulations. Duties of the debenture trustees 15. (1) It shall be the duty of every debenture trustee to - (a) call for periodical reports from the body corporate; (b) inspect books of accounts, records, registers of the body corporate and the trust property to the extent necessary for discharging his obligations; (c) take possession of trust property in accordance with the provisions of the trust deed; (d) enforce security in the interest of the debenture holders; (e) do such acts as are necessary in the event the security becomes enforceable; (f) carry out such acts as are necessary for the protection of the debenture holders and to do all things necessary in order to resolve the grievances of the debenture holders; (g) ensure that the - [(i) in case where the allotment letter has been issued and debenture certificate is to be issued after registration of charge, the debenture certificates have been despatched by the body corporate to the debenture holders within 30 days of the registration of the charge with Registrar of Companies] ⁶ (ii) debenture certificates have been despatched to the debenture holders in accordance with the provisions of the Companies Act; (iii) interest warrants for interest due on the debentures have been despatched to the debenture holders on or before the due dates; (iv) debenture holders have been paid the monies due to them on the date of redemption of the debentures; (h) exercise due diligence to ascertain whether or not the assets of the body corporate which are available by way of security or otherwise are sufficient or are likely to be or become sufficient to discharge the claims of debenture holders as and when they become due. (i) exercise due diligence to ensure compliance by the body corporate, with the provisions of the Companies Act, the listing agreement of the stock-exchange or the trust deed; (j) to take appropriate measures for protecting the interest of the debenture holders as soon as any breach of the trust deed or law comes to his notice; (k) to ascertain that the debentures have been converted or redeemed in accordance with the provisions and conditions under which they are offered to the debenture holders; (l) inform the Board immediately of any breach of trust deed or provision of any law. [(m) appoint a nominee director on the Board of the body corporate in the event of; two consecutive defaults in payment of interest to the debenture holders; or ii) default in creation of security for debentures; or iii) default in redemption of debentures. (n) communicate to the debenture holders on half yearly basis the compliance of the terms of the issue by the body corporate, defaults, if any, in payment of interest or redemption of debentures and action taken therefore.]⁷ (2) A debenture trustee shall call or cause to be called by the body corporate a meeting of all the debenture holders on - (a) a requisition in writing signed by at least one tenth of the debenture holders in value for the time being outstanding; or (b) the happening of any event, which constitutes a default or which in the opinion of the debenture trustees affects the interests of the debenture holders. Code of Conduct 16. Every debenture trustee shall abide by the Code of Conduct as specified in Schedule III. Maintenance of books of accounts, records, documents etc. 17. (1) Subject to the provisions of any law every debenture trustee shall keep and maintain proper books of accounts, records and documents relating to the trusteeship functions for a period of not less than five financial years preceding the current financial year. (2) Every debenture trustee shall intimate to the Board, the place where the books of accounts, records and documents are maintained. Information to the Board 18. (1) Every debenture trustee shall as and when required by the Board submit the following information and documents namely:- (a) the number and nature of the grievances of the debenture holders received and resolved; (b) copies of the trust deed; (c) non-payment or delayed payment of interest to debenture holders if any in respect of each issue of debentures of a body corporate; (d) details of despatch and transfer of debenture certificates giving therein the dates, mode, etc; (e) any other particular or document which is relevant to debenture trustee. (2) Where any information is called for under sub-regulation (1) it shall be the duty of the debenture trustees to furnish such information. ⁴Earlier clauses (a) & (b) which was worded as below substituted vide SEBI (Debenture Trustees) (Second Amendment) Regulations, 2000 notified in the Gazette of India dated August 8, 2000, S.O.743(E):- ^{"(a) he gives consent in writing to a body corporate to act as debenture trustee under trust deed for securing any issue of debentures by each such body corporate;} ^{(b) consent under clause (a) is given before the issue of debentures for subscription.} ⁵Inserted vide SEBI (Debenture Trustees) (Second Amendment) Regulations, 2000 notified in the Gazette of India dated August 8, 2000, S.O.743(E) ⁶Earlier sub-clause which read as below has been substituted vide SEBI (Debenture Trustees) (Second Amendment) Regulations, 2000 notified in the Gazette of India dated August 8, 2000, S.O.743(E):- " (i). refund monies due to the applicants applying for the debentures have been paid in accordance with the Companies Act and the listing agreement of the stock exchange on which the debentures of the company are listed. " ⁷Inserted vide SEBI (Debenture Trustees) (Second Amendment) Regulations, 2000 notified in the Gazette of India dated August 8, 2000, S.O.743(E)

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