Section 18(7) in Companies (Share Capital and Debentures) Rules, 2014
(7)[ The company shall comply with the requirements with regard to Debenture Redemption Reserve (DRR) and investment or deposit of sum in respect of debentures maturing during the year ending on the 31st day of March of next year, in accordance with the conditions given below: -(a)Debenture Redemption Reserve shall be created out of profits of the company available for payment of dividend;(b)the limits with respect to adequacy of Debenture Redemption Reserve and investment or deposits, as the case may be, shall be as under; -(i)Debenture Redemption Reserve is not required for debentures issued by All India Financial Institutions regulated by Reserve Bank of India and Banking Companies for both public as well as privately placed debentures;(A)in case of public issue of debentures (ii)For other Financial Institutions within the meaning of clause (72) of section 2 of the Companies Act, 2013, Debenture Redemption Reserve shall be as applicable to Non Banking Finance Companies registered with Reserve Bank of India.(iii)For listed companies (other than All India Financial Institutions and Banking Companies as specified in sub-clause (i)), Debenture Redemption Reserve is not required in the following cases -A. for NBFCs registered with Reserve Bank of India under section 45-IA of the RBI Act, 1934 and for Housing Finance Companies registered with National Housing Bank;B. for other listed companies;(B)in case of privately placed debentures, for companies specified in sub-items A and B.(iv)for unlisted companies, (other than All India Financial Institutions and Banking Companies as specified in sub-clause (i)) -(A)for NBFCs registered with RBI under section 45-IA of the Reserve Bank of India Act, 1934 and for Housing Finance Companies registered with National Housing Bank, Debenture Redemption Reserve is not required in case of privately placed debentures.(B)for other unlisted companies, the adequacy of Debenture Redemption Reserve shall be ten percent. of the value of the outstanding debentures;(v)[ In case a company is covered in item (A) of sub-clause (iii) of clause (b) or item (B) of sub-clause (iv) of clause (b), it shall on or before the 30th day of April in each year, in respect of debentures issued by such a company, invest or deposit, as the case may be, a sum which shall not be less than fifteen percent., of the amount of its debentures maturing during the year, ending on the 31st day of March of the next year in any one or more methods of investments or deposits as provided in sub-clause (vi):Provided that the amount remaining invested or deposited, as the case may be, shall not any time fall below fifteen percent. of the amount of the debentures maturing during the year ending on 31st day of March of that year] [Substituted by Notification No. G.S.R. 574(E), dated 16.8.2019 (w.e.f. 31.3.2014).].(vi)for the purpose of sub-clause (v), the methods of deposits or investments, as the case may be, are as follows: -(A)in deposits with any scheduled bank, free from any charge or lien;(B)in unencumbered securities of the Central Government or any State Government;(C)in unencumbered securities mentioned in sub-clause (a) to (d) and (ee) of section 20 of the Indian Trusts Act, 1882;(D)in unencumbered bonds issued by any other company which is notified under sub-clause (f) of section 20 of the Indian Trusts Act, 1882:Provided that the amount invested or deposited as above shall not be used for any purpose other than for redemption of debentures maturing during the year referred above.(c)in case of partly convertible debentures, Debenture Redemption Reserve shall be created in respect of non-convertible portion of debenture issue in accordance with this sub-rule.(d)the amount credited to Debenture Redemption Reserve shall not be utilized by the company except for the purpose of redemption of debentures.]
