Published on April 26, 2014
Borrowing Powers & Debentures PDF created with pdfFactory Pro trial version www.pdffactory.com
PowersPowers ofof DirectorsDirectors toto borrow are subject to theborrow are subject to the following limitations:following limitations: • Statutory Limitation: • prohibits the directors from borrowing an amount beyond the aggregate of the paid up capital of the company and its free reservescapital of the company and its free reserves • Limitation under Memorandum or Articles • Ultra Vires the Company • Ultra Vires the Directors • Power to give security PDF created with pdfFactory Pro trial version www.pdffactory.com
DEBENTURES • Debenture means “an instrument in writing issued by a company under its common seal, acknowledging its indebtedness for a certain sum of money and undertaking to repay it on or after a fixed future date.”or after a fixed future date.” PDF created with pdfFactory Pro trial version www.pdffactory.com
Kinds of debentures • Bearer debentures • Registered debentures • Secured debentures • Unsecured or naked debentures• Unsecured or naked debentures PDF created with pdfFactory Pro trial version www.pdffactory.com
Charges • If the debtor defaults ,the creditor can sue for the amount owed or he has a right for action. But if a debtor becomes insolvent or disappear , the creditor has no security. • Fixed charges • Floating charges PDF created with pdfFactory Pro trial version www.pdffactory.com
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