Debenture funding and dividend distribution both sit at the intersection of finance and company law. The board should review security, conversion, trustee/covenant issues, dividend source and unpaid dividend tracking before approvals.
Section 71 says a company may issue debentures with an option to convert such debentures into shares, either wholly or partly at redemption, subject to approval requirements where applicable. It also prohibits debentures carrying voting rights.
Section 123 says no dividend shall be declared or paid except out of permitted profits/reserves routes after providing for depreciation, subject to the section. Section 124 deals with unpaid dividend account, and Section 125 deals with Investor Education and Protection Fund.
| Area | Control |
|---|---|
| Convertible debentures | Check special resolution and conversion terms. |
| Secured debentures | Check charge creation and trustee/security records. |
| Dividend declaration | Check profits, depreciation, deposit default and board/shareholder route. |
| Unpaid dividend | Transfer unpaid/unclaimed amount to unpaid dividend account where triggered. |
| IEPF | Track long-unclaimed amounts and shares for eventual IEPF workflow. |
This article is intentionally source-limited to official India Code / MCA material. Verify final filing positions with the latest Act, Rules, MCA forms and portal advisories before publishing.
Section 71 covers debentures.
Section 123 covers declaration of dividend.
Section 124 deals with unpaid dividend account and Section 125 deals with the Investor Education and Protection Fund.