Section 18(1) in The Companies (Share Capital and Debentures) Rules, 2014
(1)The company shall not issue secured debentures, unless it complies with the following conditions, namely:-(a)An issue of secured debentures may be made, provided the date of its redemption shall not exceed ten years from the date of issue.Provided that a company engaged in the setting up of infrastructure projects may issue secured debentures for a period exceeding ten years but not exceeding thirty years;(b)[ Such an issue of debentures shall be secured by the creation of a charge on the properties or assets of the company or its subsidiaries or its holding company or its associates companies, having a value which is sufficient for the due repayment of the amount of debentures and interest thereon.] [Substituted by Notification No. G.S.R. 704 (E), dated 19.7.2016 (w.e.f. 31.3.2014).](c)the company shall appoint a debenture trustee before the issue of prospectus or letter of offer for subscription of its debentures and not later than sixty days after the allotment of the debentures, execute a debenture trust deed to protect the interest of the debenture holders ; and(d)the security for the debentures by way of a charge or mortgage shall be created in favour of the debenture trustee on-(i)[ any specific movable property of the company or its holding company or subsidiaries or associate companies or otherwise.] [Substituted by Notification No. 210(E), dated 18.3.2015 (w.e.f. 31.3.2014).](ii)any specific immovable property wherever situate, or any interest therein.Provided that in case of a non-banking financial company, the charge or mortgage under sub-clause (i) may be created on any movable property.][Provided further that in case of any issue of debentures by a Government company which is fully secured by the guarantee given by the Central Government or one or more State Government or by both, the requirement for creation of charge under this sub-rule shall not apply.Provided also that in case of any loan taken by a subsidiary company from any bank or financial institution the charge or mortgage under this sub-rule may also be created on the properties or assets of the holding company;] [Inserted by Notification No. 210(E), dated 18.3.2015 (w.e.f. 31.3.2014).]
