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Explain the guidelines of SEBI for creating Debenture Redemption Reserve.

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Securities and Exchange Board of India (SEBI) have provided some guidelines for redemption of debentures. 

The focal points of these guidelines are: 

(i) Every company shall create Debenture Redemption Reserve in case of issue of debenture redeemable after a period of more than 18 months from the date of issue. 

(ii) The creation of Debenture Redemption Reserve is obligatory only for non-convertible debentures and non-convertible portion of partly convertible debentures. 

(iii) A company shall create Debenture Redemption Reserve equivalent to at least 50% of the amount of debenture issue before starting the redemption of debenture. 

(iv) Withdrawal from Debenture Redemption Reserve is permissible only after 10% of the debenture liability has already been reduced by the company. 

SEBI guidelines would not apply under the following situations: 

(i) Infrastructure company (a company wholly engaged in the business of developing, maintaining and operating infrastructure facilities), and 

(ii) A company issuing debentures with a maturity period of not more than 18 months.

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