Process of appointment of debenture trustee
The appointment of a debenture trustee needs to be made before the debenture is issued by the company. The fact of the appointment of the debenture trustee along with the consent to act as such needs to be mentioned in the prospectus of the company. There are certain grounds of disqualification from being appointed as a debenture trustee:
1. Such a person cannot be a shareholder in the company
2. Such a person should not be entitled to receiving consideration from the company for any purpose
3.Any person who has provided a guarantee to the principal debts which have been subsequently secured by the issuing of debentures.

The primary function of such debenture trustees is to protect the collective interest of the debenture holders of the company. Further such debenture trustees also ensure the creation of securities with the stipulated time period and grievance redressal of the debenture holders. The specific duties of a debenture Trustee are:

1. To check that the assets of the company are sufficient to discharge the debenture liability
2. To ensure that the prospectus is not misleading
3. To call meetings of debenture holders when they are required
4. To take reasonable steps to prevent the breach of covenants

A petition can be presented to the tribunal if the debenture trustee finds that the assets of the company are either insufficient or likely to become insufficient to discharge even the principal amount which is owed to the debenture holders. At this time, the debenture trustee must present a petition before the appropriate tribunal in order to protect the interests of the debenture holders. This option is lost if the company undergoes winding up before such a petition is presented to the appropriate tribunal. The company is also to maintain a debenture redemption reserve according to Section 71 (4) of the Companies Act, 2013. A sufficient amount of funds should be put in this fund at the end of each year from the available profits that the company has made in its operation. The funds credited to this account cannot then be used for any other purpose. For all practical purposes, this debenture reserve fund is a percentage of the total outstanding debentures against a company. This reserve limit has been reduced to 10% of the total outstanding debentures against a company, down from 25% of the reserve, or “sinking fund” that such companies were required to maintain.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.