Financial Reporting and Ethics - The Institute of Chartered ...

THE ENVIRONMENT: CORPORATE, PROFESSIONAL AND REGULATORYCreation of DebenturesA debenture may be a simple instrument or by such an instrumentcovered by a trust deed. Section 168 provides for matters to be includedin the statement of the debentures.Fixed and Floating Charges (Section 178)A ‘floating charge’ means an equitable charge over the whole or specifiedpart of company’s undertakings and ‘assets’ including cash and uncalledcapital of the company, both present and future.A ‘fixed charge’ on any property has priority over a floating chargeaffecting that property unless otherwise stated.Power of the Court (Section 180)Wherever a fixed or floating charge has become enforceable, the Courtshall have power to appoint a receiver and in the case of a floatingcharge, a receiver and manager of the assets subject to the charge.A receiver or manager shall not be appointed as a means of enforcingdebentures not secured by any charge. Where a receiver or a receiverand manager is appointed by the Court, advertisement to this effect ismade by the receiver or the receiver and manager in the Gazette and intwo daily newspapers.Debentures es Trust Deed (Section 184 (1))Every Trust Deed, which on its own is both contract and legal documentwhen effected, must state the following matters:(a)(b)(c)(d)(e)The maximum sum which the company may raise by issuingdebentures of the same class;The maximum discount payable;The nature of the assets involved;The date of payment of interest and of the principal; andThe circumstances in which the mortgage, charge or security maybe realized, etc.A debentures trust deed, after its preparation, should be submitted forregistration and payment of appropriate stamp duty, and thereafter,filed with the Corporate Affairs Commission. Failure to register asrequired will render it void against the liquidator and any creditor ofthe company.Transferability of Debentures es (Section 189)Debentures are transferable, except when there is an express provisionin the terms of any debenture restricting its transfer.159