Debenture trustees are appointed by a company issuing debentures.

Question

Justify the following statements.

Debenture trustees are appointed by a company issuing debentures.

Answer 1

• Debenture trustees are appointed when the company issues a prospectus or invites more than 500 people.
• They are appointed to protect the interest and redress the grievances of debenture holders.
• Debenture trustees act as custodians of assets and create a charge on assets of the company on behalf of debenture holders.
• In case, the company failed to redemption of a debenture or its interest, then debenture trustees by the order of NCLT can realize the assets and settle the dues.
• Thus, it is rightly said that debenture trustees are appointed by the company for issuing debenture.