1. Eligibility to Issue Debentures

• A private limited company can issue secured or unsecured debentures
  
• Debentures may be issued privately to a group of investors (private placement), not to the public
  
• Public offering of debentures is not allowed for private companies
  

2. Types of Debentures Allowed

• Secured Debentures: Backed by the company’s assets as collateral
  
• Unsecured Debentures: Not backed by collateral, carry higher risk
  
• Convertible Debentures: Can be converted into shares after a specified period
  
• Non-convertible Debentures (NCDs): Cannot be converted into equity, repayable in cash
  

3. Compliance Requirements

• Must pass a board resolution and, if required, a special resolution in a general meeting
  
• For secured debentures, the company must create a charge on its assets and file Form CHG-9 with the ROC
  
• Must follow rules under Section 71 of the Companies Act, 2013 and Rule 18 of Companies (Share Capital and Debentures) Rules, 2014
  

4. Private Placement Procedure

• Issue debentures via private placement under Section 42 of the Companies Act
  
• File Form PAS-3 (Return of Allotment) with the ROC within 15 days of allotment
  
• Maintain a Debenture Register and issue debenture certificates to holders
  

5. Restrictions and Conditions

• Cannot offer debentures to more than 200 persons in a financial year, excluding QIBs and employees under ESOP
  
• Cannot issue voting rights on debentures
  
• Redemption and interest terms must be clearly defined in the offer document