What is the provision in relation to issue of Redeemed Debenture?


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Power to issue redeemed debenture: Section 121(2) of the companies Act, 1956 provides that if there is no provision to the contrary in the Articles or in the condition of the issue or if there is no resolution showing an intention to cancel the redeemed debentures, the company should have the power to keep the debentures alive for the purpose of re-issue. The company may re-issue either the same debentures or other debentures in their place.

In case of such re-issue the persons entitled to the debentures shall have the same right and priorities as if the debentures had never been redeemed. [Section 121(2)]

With the object of keeping the debentures alive for the purpose of re-issue, if they have been transferred to a nominee, a transfer from that nominee shall be deemed to be a reissue for the purpose of section 121 [section 121(3)]

The aim of keeping debentures that have been issued alive is that formalities for issue of debentures need not be complied with again and the issue can made without delay. Stamp duty is to be paid.

The power to reissue debentures does not authorize the issue in the place of the redeemed debentures different in their terms from those which have been redeemed.


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