Section 208 CAMA 2020

Execution of debenture trust deed

(1) Every company which offers debentures to the public for subscription or purchase shall, before issuing any of the debentures, execute a debenture trust deed in respect of them and procure the execution of the deed by the trustee for the debenture holders appointed by the deed.

(2) No debenture trust deed shall cover more than one class of debentures, whether or not the trust deed is required by this section to be executed.

(3) Where a trust deed is required to be executed by this section but has not been executed, the Court, on the application of a debenture holder concerned,
may—
(a) order the company to execute a trust deed ;
(b) direct that a person nominated by the Court to be appointed as a trustee ; and
(c) give such consequential directions as it deems fit, as to the contents of the trust deed and its execution by the trustee.

(4) For the purposes of this Act, debentures shall belong to different classes if different rights attach to them in respect of—
(a) the rate of, or dates for payment of, interest ;
(b) the dates when, or the instalments by which, the principal of the debenture shall be repaid, unless the difference is solely that the class of debentures shall be repaid during a stated period of time and particular debentures may be repaid at different dates during that period according to
selections made by the company or by drawings, ballot or otherwise ;

(c) any right to subscribe for or convert the debentures into shares in, or other debentures of, the company or any other company ; or
(d) the powers of the debenture holders to realise any security.

(5) Debentures further belong to different classes, if they do not rank equally for payment when any security invested in the debenture holders under any trust deed is realised or when the company is wound up, if, in the circumstances mentioned in subsection (4) the subject matter of any such
security or the proceeds, or any assets available to satisfy the debentures, is or are not to be applied in satisfying the debentures strictly in proportion to the amount of principal, premiums and arrears of interest to which the holders of them are respectively entitled.

(6) A debenture is covered by a trust deed if the holder of the debenture is entitled to —
(a) participate in any money payable by the company under the deed ; or
(b) the benefit of any mortgage, charge or security created by the deed, whether alone or together with other persons.

(7) If a company issues debentures in circumstances in which this section requires a debenture trust deed to be executed, without such a deed having been executed in compliance with this section, or if the company issues debentures under a trust deed which covers two or more classes of debentures,
the directors of the company who are in default commit an offence and are liable jointly on conviction to such fine as the court deems fit and in addition, the directors of the company shall be jointly severally liable to such fines as the Commission shall specify in the regulation.