Debenture Agreement (India)
Companies Act 2013 / SEBI Regulations
DEBENTURE TRUST DEED
Under Section 71 of the Companies Act 2013 and Rule 18 of the Companies (Share Capital and Debentures) Rules 2014
This Debenture Trust Deed ("Deed") is executed on [Allotment Date] between:
(1) [Issuer Name] (CIN: [Issuer CIN], PAN: [Issuer PAN]), a company incorporated under the Companies Act 2013, having its registered office at [Issuer Address] (hereinafter the "Company" or "Issuer"); and
(2) [Trustee Name] (SEBI Registration No. [Trustee SEBI Reg No]), a debenture trustee registered under the SEBI (Debenture Trustees) Regulations 1993, having its office at [Trustee Address] (hereinafter the "Debenture Trustee").
1. DEBENTURE TERMS
1.1 Description: [Debenture Name]
1.2 Total Issue Size: [Total Issue Size]
1.3 Face Value: [Face Value]
1.4 Coupon Rate: [Coupon Rate] per annum, payable [Interest Frequency].
1.5 Date of Allotment: [Allotment Date]
1.6 Maturity Date: [Maturity Date]
1.7 Tax Deduction: Interest on debentures is subject to TDS under Section 193 of the Income Tax Act 1961, except where debenture holders furnish a valid declaration in Form 15G/15H or other exemption certificate.
2. SECURITY AND CHARGE
2.1 Security Type: [Security Type]
2.2 Charged Assets: [Security Description]
2.3 The Company shall register the charge created hereunder with the Registrar of Companies at [ROC Name] within 30 days of the date of creation in accordance with Section 77 of the Companies Act 2013.
2.4 The Debenture Trustee is authorised to enforce the security upon occurrence of an Event of Default, including by taking possession and selling the charged assets.
3. COVENANTS OF THE COMPANY
3.1 The Company shall make timely payment of interest at [Coupon Rate] and principal at maturity on [Maturity Date].
3.2 The Company shall not create any charge ranking senior to or pari passu with the charge created hereunder without prior written consent of the Debenture Trustee.
3.3 The Company shall provide the Debenture Trustee with audited annual accounts within 180 days of each financial year end.
3.4 The Company shall maintain the Debenture Redemption Reserve as required under Section 71(4) of the Companies Act 2013.
4. EVENTS OF DEFAULT AND GOVERNING LAW
4.1 Events of Default include: failure to pay interest or principal on due dates; breach of any covenant; commencement of insolvency proceedings; and cross-default on any other financial indebtedness exceeding ₹1 crore.
4.2 This Deed is governed by the laws of India. Disputes shall be subject to the jurisdiction of courts at [Jurisdiction], or alternatively resolved by arbitration at [Arbitration Seat] under the Arbitration and Conciliation Act 1996.
Company — Authorised Director
________________
Signature
Debenture Trustee — Authorised Signatory
________________
Signature
Witness
________________
Signature
What Is a Debenture Agreement (India)?
A Debenture Agreement in India documents a credit arrangement, recording how much is owed, when it falls due and the consequences of late payment.
The legal framework governing the Debenture Agreement (India) in India draws on several key statutes and regulatory bodies. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Parties executing a Debenture Agreement (India) in India should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Negotiable Instruments Act, 1881 sets the foundational requirements.
When Do You Need a Debenture Agreement (India)?
A Debenture Agreement is needed when a company in India raises debt capital through debenture issuance — either through a private placement to identified investors or through a public issue listed on a stock exchange. Private placement of debentures (to not more than 200 persons in a financial year) requires a private placement offer letter and a board resolution under Section 42 of the Companies Act 2013. Public issue of NCDs requires compliance with the SEBI (Issue and Listing of Non-Convertible Securities) Regulations 2021, including filing a draft offer document with SEBI. A Debenture Agreement is specifically needed for: secured debentures issued to banks or financial institutions as part of a loan facility (debentures as security for borrowings); non-convertible debentures issued to institutional investors; bonds issued by infrastructure companies under special regulatory frameworks; debentures issued by NBFCs and HFCs to raise funds; and compulsory convertible debentures (CCDs) used in startup and venture capital transactions to defer valuation decisions while providing downside protection to investors. In startup financing, CCDs are commonly used in Series A and B rounds because they allow investors to invest on debt terms initially, with conversion into equity at a future valuation.
Parties in India should prepare a Debenture Agreement (India) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Debenture Agreement (India)
A Debenture Agreement for India should contain: parties — issuer company with CIN, registered office, and authorised signatory; debenture trustee (SEBI-registered for listed debentures) with name and address; debenture details — class (secured/unsecured, convertible/non-convertible), face value, issue price, total issue size in INR, and allotment date; interest/coupon — rate (fixed or floating benchmark-linked), payment frequency (quarterly, semi-annual, annual), day count convention, and tax deduction at source (TDS) provisions under Section 193 of the Income Tax Act 1961; repayment schedule — maturity date, bullet or amortising repayment, and any call or put options; security — description of charged assets, type of charge (fixed or floating), charge creation and registration under Section 77 of the Companies Act 2013, security enforcement mechanism; representations and warranties — due incorporation, authority, no conflicts, solvency, and no material litigation; positive and negative covenants — financial maintenance covenants, restrictions on creating pari passu security, asset maintenance obligations; events of default — payment defaults, covenant breaches, insolvency, change of control, cross-default; trustee provisions — appointment, duties, powers, fees, indemnity, and replacement; debenture holder meetings and modification; governing law and dispute resolution (typically arbitration under the Arbitration and Conciliation Act 1996); and schedules including form of debenture certificate and charge documents.
Additional compliance elements for a Debenture Agreement (India) used in India include: Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Forms-legal.com provides this template as a starting point for India-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Debenture Agreement (India) (India) [Legal document template]. Forms Legal. https://forms-legal.com/india/financial/agreements/debenture-agreement-india
"Debenture Agreement (India) (India)." Forms Legal, 2026, https://forms-legal.com/india/financial/agreements/debenture-agreement-india.
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year = {2026},
howpublished = {\url{https://forms-legal.com/india/financial/agreements/debenture-agreement-india}},
note = {Free legal document template. Based on Negotiable Instruments Act, 1881}
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Frequently Asked Questions
Under Section 2(30) of the Companies Act 2013, 'debenture' includes debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the company's assets or not. Debentures are a form of corporate debt instrument through which companies raise capital from investors (debenture holders) by promising to repay the principal on a specified date and to pay periodic interest at an agreed rate. Debentures are distinct from shares in that debenture holders are creditors of the company — not members — and their rights are governed by the debenture trust deed and the Companies Act 2013 rather than the Companies Act's provisions relating to share capital and shareholders. The main types of debentures in India are: (1) Secured debentures — backed by a charge (fixed or floating) on specific assets of the company. Under Section 71(3) of the Companies Act 2013, secured debentures must create a charge on the property or assets of the company within 30 days of allotment. (2) Unsecured debentures (naked debentures) — issued without any security or charge on assets; holders are unsecured creditors and rank below secured creditors in liquidation. (3) Convertible debentures — carrying a right to be converted into equity shares at a future date; under Section 71(1) of the Companies Act 2013, fully convertible debentures require special resolution approval. Partially convertible debentures (PCDs) and optionally convertible debentures (OCDs) are also issued.
The Companies Act 2013 imposes several requirements on companies issuing debentures, aimed at protecting debenture holders and ensuring regulatory compliance. Board and shareholder approval: A company must obtain board resolution approval for the debenture issue. If the total borrowings of the company (including debentures) are proposed to exceed the paid-up share capital and free reserves, a special resolution of shareholders is required under Section 180(1)(c) of the Companies Act 2013. Debenture Trust Deed: Under Section 71(5) of the Companies Act 2013, every company that issues secured debentures must appoint a Debenture Trustee before the debenture offer is made and must create a Debenture Trust Deed within 60 days of allotment. The Debenture Trustee must be registered with SEBI if the debentures are listed. Rule 18 of the Companies (Share Capital and Debentures) Rules 2014 prescribes the form of the Debenture Trust Deed in Form No. SH.12. Debenture Redemption Reserve (DRR): Under Section 71(4) and the Companies (Share Capital and Debentures) (Amendment) Rules 2019, certain classes of companies must maintain a DRR of 10% of the outstanding debentures as a ring-fenced reserve for redemption, and invest or deposit at least 15% of the debentures maturing during the next year in a separate bank account or liquid securities.
A Debenture Trust Deed is the master document governing the relationship between the company (issuer), the debenture trustee, and the debenture holders. Under Rule 18 of the Companies (Share Capital and Debentures) Rules 2014, Form SH.12 provides the prescribed form for a Debenture Trust Deed, though the actual content must be adapted to the specific terms of the debenture issue. The key provisions of a Debenture Trust Deed include: (1) Parties — the company, the debenture trustee (a SEBI-registered entity for listed debentures), and a description of the class of debenture holders as beneficiaries. (2) Terms of the debentures — face value, issue price (at par, premium, or discount), coupon rate (fixed or floating), interest payment dates, and the tenor and redemption date(s). (3) Security — description of the assets charged (fixed charge on specific immovable property or plant and machinery; floating charge on current assets), the terms of enforcement of the security, and the creation and registration of charge. (4) Covenants by the company — to make timely interest and principal payments; to maintain the charged assets; to insure the charged assets; to provide financial information and compliance certificates to the trustee; not to create pari passu or senior ranking security without trustee's consent; to maintain books of accounts and permit inspection by the trustee. (5) Events of default — non-payment of interest or principal; breach of covenants; insolvency; material adverse change; cross-default on other borrowings; loss of key licences.
A Debenture Agreement (India) does not legally require a lawyer in India, and individuals and businesses may draft and execute the document independently. The Negotiable Instruments Act, 1881 does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified India lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Supreme Court of India has jurisdiction over disputes arising from this type of document, and Registrar of Companies (ROC) may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.
A Debenture Agreement (India) does not legally require a lawyer in India, though legal advice is recommended. Under Indian law, the Indian Contract Act 1872 governs agreements. The Companies Act 2013 and Registrar of Companies (ROC) regulate corporate documents. The Information Technology Act 2000 governs electronic contracts and data protection. The Consumer Protection Act 2019 provides consumer rights. The Income Tax Act 1961 requires tax compliance. Forms-legal.com provides this template as a starting point — always review with a qualified Indian advocate for significant transactions. Under India law, Negotiable Instruments Act, 1881, parties should seek independent legal advice from a qualified lawyer to confirm compliance with all applicable requirements. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). Forms-legal.com provides this template as a starting point for India-compliant documentation.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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