Quiz on Redemption of Debentures

What is a debenture?

• A type of bank loan

• A type of equity share

• An instrument acknowledging a debt

• A form of government bond

According to Section 71(1) of the Companies Act, 2013, what option may a company include when issuing debentures?

• Option to redeem at a premium

• Option to convert into shares

• Option to pay interest in cash

• Option to extend maturity

What must a company create out of its profits when issuing debentures?

• Debenture Redemption Reserve

• General Reserve

• Contingency Fund

• Investment Fund

Which of the following is NOT a method of redeeming debentures?

• Payment in instalments

• Payment in lumpsum

• Purchase in open market

• Issuing new debentures

What is the maximum period for which secured debentures can be issued according to Rule 18(1)?

• Fifteen years

• Thirty years

• Ten years

• Five years

What is the purpose of the Debenture Redemption Reserve?

• To invest in new projects

• To cover operational losses

• To ensure funds for redemption of debentures

• To pay dividends

What happens if a company fails to redeem debentures on maturity?

• The company is fined

• The Tribunal may direct the company to redeem them

• The debenture holders lose their investment

• The debentures are automatically renewed

Which of the following is a requirement for issuing secured debentures?

• Creation of a charge on assets

• Approval by shareholders

• Issuance only to government entities

• No voting rights

What is the minimum percentage of debenture redemption reserve that must be created for unlisted companies?

• 15%

• 20%

• 5%

• 10%

When must a company invest the amount for Debenture Redemption Reserve?

• Before issuing debentures

• On the date of redemption

• By April 30 each year

• At the end of the financial year