Company Law - Debentyre

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					 The definition and the definition of debenture
In legal terms, there is no specific definition for the debentures. In the case of

Levy v. Slate & Slab Co. Abercorris. (1887) 37 Ch. 260, 264, Chitty J said "

  A debenture means a document Selatan Either Creates a debt or acknowledges it, and
Any document Selatan fulfils Either of These is adebenture conditions. Precision metal I
can not find any legal definition of the term. It is not in law or commerce Either a Strictly
technical terms, or what is Called a term of art. "

Whilst the the Section 4 (1) also provides definitions debentures as

"stacks debentures, bonds, notes and other securities of the corporation whether a charge
on the assets of the corporation or not"

Of the two definitions above, it can be concluded that the debenture is a confession
document or documents that saw the company's debt to creditors, where this debt will
often be accompanied by a charge on the assets of the company, either in one / more than
one charge. Should be noted that not all the documents that saw the company's debt is a
debenture. Normally debenture referred to a method to recover the debt for a long distant
term. Debenture holders will benefit from the debt / loans given to the company

 Section 74. Qualifications of trustee for debenture holders.

(1) Subject to this section every corporation which offers debentures to the public for
subscription or purchase in Malaysia after the commencement of this Act shall make
provision in those debentures or in a trust deed relating to those debentures for the
appointment of a trustee corporation as trustee for the holders of the debentures

       Based on the above, clearly shows any company that offers debentures to the
public shall state the appointment of a trustee to the debenture holders of the debentures
or the trust deed issued



(2) Where a borrowing corporation is required to appoint a trustee for the holders of any
debentures in accordance with subsection (1) it shall not allot any of those debentures
until the appointment has been made and the trustee corporation has consented to act as
trustee.

      This means that borrowing is not allowed to issue debentures until the corporation
appointed as trustee agrees to act as trustee and the appointment has already been created.
we need to understand that the trustee appointed by the Company shall consist of a
corporation. This means that an individual is not eligible to be appointed as trustee to the
debenture holdaers
(3) Without leave of the Court, a trustee corporation shall not be appointed, hold office
or act as trustee for the holders of debentures of a borrowing corporation if that trustee
corporation is -

       (a) a shareholder who beneficially holds shares in the borrowing corporation;

       (b) beneficially entitled to moneys owed by the borrowing corporation to it;

       (c) a corporation that has entered into a guarantee in respect of the principal debt
       secured by those debentures or in respect of interest thereon; or

       (d) a corporation that is by virtue of section 6 deemed to be related to -
               (i) any corporation of a kind referred to in paragraphs (a) to (c) ; or

               (ii) the borrowing corporation.


         This means that if the borrowing company had appointed his own company or a
company which is a guarantor for debts incurred or to appoint a company that has an
interest on the debt incurred as a trustee to the debenture holders are protected, who was
appointed trustee can not stop arbitrary, melaikan it replaced with another corporation
with qualifications as provided by the Act.



(4) Notwithstanding anything contained in subsection (3), that subsection shall not
prevent a trustee corporation from being appointed, holding office or acting as trustee
for the holders of debentures of a borrowing corporation by reason only that -

(a) the borrowing corporation owes to the trustee corporation or to a corporation that is
deemed by virtue of section 6 to be related to the trustee corporation any moneys so long
as such moneys are -
               (i) moneys that (not taking into account any moneys referred to in
               subparagraphs (ii) and (iii)) do not, at the time of the appointment or at
               any time within a period of three months after the debentures are first
               offered to the public, exceed one-tenth of the amount of the debentures
               proposed to be offered to the public within that period and do not, at any
               time after the expiration of that period, exceed one-tenth of the amount
               owed by the borrowing corporation to the holders of the debentures;

               (ii) moneys that are secured by, and only by, a first mortgage over land of
               the borrowing corporation, or by any debentures issued by the borrowing
               corporation to the public or by any debentures not issued to the public
               which are issued pursuant to the same trust deed as that creating other
               debentures issued at any time by the borrowing corporation to the public
               or by any debentures to which the trustee corporation, or a corporation
               that is by virtue of section 6 deemed to be related to the trustee
               corporation, is not beneficially entitled; or

               (iii) moneys to which the trustee corporation, or a corporation that is by
               virtue of section 6 deemed to be related to the trustee corporation, is
               entitled as trustee for holders of any debentures of the borrowing
               corporation in accordance with the terms of the debentures or of the
               relevant trust deed; or

       (b) the trustee corporation, or a corporation that is deemed by virtue of section 6
       to be related to the trustee corporation, is a shareholder of the borrowing
       corporation in respect of shares that it beneficially holds, so long as the shares in
       the borrowing corporation beneficially held by the trustee corporation and by all
       other corporations that are deemed by virtue of section 6 to be related to it, do
       not carry the right to exercise more than one-twentieth of the voting power at any
       general meeting of the borrowing corporation.


(5) Nothing in subsection (3) shall -

       (a) affect the operation of any debentures or trust deed issued or executed before
       the commencement of this Act; or

       (b) apply to or in relation to the trustee for the holders of any such debentures,
unless pursuant to any such debentures or trust deed a further offer of debentures is
made to the public after the commencement of this Act.

       It asserts that voyages anywhere debentur or mail the bond Trustees are published
 or completed prior to the beginning of this Deed or force used to or in relation to the
 mandate holders to any holder of such debentur




(6) If default is made in complying with this section, the corporation and every officer of
the corporation who is in default shall be guilty of an offence against this Act.
Penalty: Ten thousand ringgit. Default penalty.

         This means any employee of the perbadanan mengingkar or does not comply
 with the provisions in this section then the claim may be made for making a mistake on
 this Deed.This is in order to outline the line between justice both parties who deal with
 this debenture.With this, each party's interests are protected and also dimaksimakan.

				
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