What is the difference between companies Act 1956 and Companies Act 2013?

The Companies Act, 1956 (existing Act) contains 658 sections and XV schedules. The Companies Act 2013 has 464 sections and 7 schedules. The Act, has lesser sections as the Companies will be governed more through the rules which are yet to be prescribed.

Can a company issue non-convertible debentures?

A Company can only issue Secured Non-Convertible Debentures (NCD’s). In case of issue of NCD’s by a Company not constituting a charge on the assets of the Company, it shall be mandatory for listing of the securities on the recognized stock exchange so that same does not come under the purview of deposits.

Which companies are exempted from creating DRR?

And companies falling under the following four categories are altogether exempt from DRR requirements:

• All India Financial Institutions (AIFIs) regulated by Reserve Bank of India (RBI)
• Other financial institutions regulated by RBI.
• Banking companies for both public and privately-placed debentures.

Is NCD good for company?

NCD is a financial instrument that is used by companies to raise long-term capital through a public issue. With interest rates trending low in a post-Covid scenario with abundant liquidity, it may be worthwhile to lock in the high yield of nearly 10%, available with NCDs.

What is the Companies Act 1956 describe the nature and types of companies?

The Companies Act 1956 was an Act of the Parliament of India, enacted in 1956, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries.

What is difference between secured and unsecured NCD?

Unsecured NCDs are much riskier than the secured NCDs as the assets of the company do not back these. Hence, when the company defaults on its payment, the investors have no choice but to wait until they receive payments as there are no assets of the company to recover their dues.

Is it compulsory to create DRR?

Debenture Redemption Reserve (DRR) is a fund maintained by companies that have issued debentures. Its purpose is to minimise the risk of default on repayment of debentures. The requirement to create a DRR was compulsory for all companies.

What protects the interest of debenture holders?

To protect the interest of debenture holders, the company appoints Debenture Trustees.

Why do companies issue NCD?

Non-convertible debentures (NCD) are fixed-income instruments, usually issued by high-rated companies in the form of a public issue to accumulate long-term capital appreciation. They offer relatively higher interest rates when compared to convertible debentures.