Justify the following statements.

1. A company has to create charge on its assets for issuing secured debentures.
Ans: Justification:-
(1) The company has to create a charge on the assets of the company or its subsidiary company or holding company.
(2) The value of charge should be sufficient for the repayment of the amount of debentures and interest thereon.
(3) If a Government company issues secured debentures which has Central or State Government’s guarantee, then it need not create any charge on its assets.
(4) Thus, it is rightly justified that, a company has to create the charge on its assets for issuing secured debentures for the security of the repayment of loans.

2. Debenture trustees is appointed by a company issuing debentures.
Ans: Justification:-
(1) Debentures Trustee is a person or institution which protects the interest of the debenture holders. The Trustees become the custodian of the assets on which charge has been created.
(2) A company which issues prospectus or invites more than 500 persons to buy its debentures has to appoint one or more Debentures Trustee. Companies issuing secured debentures also must appoint Debentures Trustee.
(3) Debentures Trustee is appointed before prospectus or letter of offer/offer letter is issued or within 60 days after the allotment of the debenture. The Trustees must give written consent to act as Debenture Trustees.
(4) Thus, it is rightly justified that, debentures trustee is appointed by a company issuing debentures.

3. A company can issue only certain types of debentures.
Ans : Justification:-
(1) A company can issue secured as well as unsecured debentures. It can also issue non-convertible debentures or debentures which can be converted fully or partly into equity shares. 
(2) The Board of Directors of a company have the authority to issue debentures. All debentures are redeemable i.e, have to be repaid.
(3) The company can issue debentures to its members or make a public offer or offer it even through private placement.
(4) Thus, it is rightly justified that, a company can issue only certain types of debentures.