Since a Private Company cannot make a public offer, the entire process must adhere to the Private Placement requirements under Section 42 and Section 71 of the Companies Act, 2013.
📝 Detailed Note: Secured Debentures Issue by a Private Limited Company
The process involves compliance with two primary frameworks: Private Placement (Section 42 & Rule 14) and Secured Debentures (Section 71 & Rule 18).
I. Pre-Allotment Statutory Conditions
| Compliance Area | Requirement | Governing Provision |
| Board Approval | Pass a Board Resolution (BR) under Section 179(3) to approve the issue, determine the offer terms, and approve the Private Placement Offer-cum-Application Letter (Form PAS-4). | Section 179(3) & SS-1 |
| Shareholder Approval | Pass a Special Resolution (SR) in a General Meeting for the issue. For Non-Convertible Debentures (NCDs), a single SR can be passed for all offers/invitations to be made in the upcoming year. | Section 42(4) |
| Borrowing Limit | The borrowing must be within the overall limits prescribed by Section 179(3)(c) and Section 180, though Section 180 is generally not applicable to a private company unless it is a subsidiary of a public company. | Section 179(3) & Section 180 |
| Offer Document Filing | File the Board Resolution and Special Resolution with the ROC in Form MGT-14 within 30 days of passing the respective resolutions. | Section 117 & Rule 14(8) |
| Debenture Trustee | Mandatory for a Secured Debenture issue, regardless of the number of subscribers. Obtain a written consent from the Debenture Trustee (DT). | Section 71(5) & Rule 18(1) |
| Private Placement Offer | The offer must be made to a select group of identified persons (max 200 per financial year, per class of security) using the serially numbered Form PAS-4. | Section 42(2) & Rule 14 |
| Separate Bank Account | Open a separate bank account in a Scheduled Bank to receive the application money. This money cannot be used for any other purpose until the allotment is completed and the return of allotment is filed. | Section 42(6) |
| Valuation | Obtain a Valuation Report from a Registered Valuer to determine the issue price (in case of Convertible Debentures) or to certify the sufficiency of assets being charged (for Secured Debentures). | Section 247 |
II. Post-Allotment Statutory Compliances
| Compliance Area | Requirement | Due Date & Form |
| Allotment | Pass a Board Resolution to approve the allotment of debentures. Allotment must be completed within 60 days from the date of receipt of application money. | Within 60 days of receipt of money |
| Return of Allotment | File the Return of Allotment with the ROC. | Within 15 days of the allotment resolution in Form PAS-3 |
| Debenture Trust Deed (DTD) | The DTD must be executed between the company and the Debenture Trustee. | Within 60 days of the allotment of debentures in Form SH-12 (or as near thereto) |
| Charge Creation | Create the Charge on the identified assets (which must be of sufficient value to cover principal and interest) in favour of the Debenture Trustee. | As per DTD terms |
| Registration of Charge | File the particulars of the charge creation with the ROC. | Within 30 days of the charge creation in Form CHG-9 |
| Debenture Certificate | Issue the Debenture Certificate to the allottees. | Within 6 months from the date of allotment |
📄 Required Forms to be Filed with the ROC
| Form No. | Purpose of Filing | Section/Rule | Due Date |
| MGT-14 | Filing of Special Resolution (and Board Resolution u/s 179(3) for Private Companies) for issue of debentures. | Sec. 117(3) | Within 30 days of passing the SR/BR |
| PAS-3 | Return of Allotment (Mandatory after all debentures are allotted). | Sec. 42(8) | Within 15 days of the allotment date |
| CHG-9 | Registration of Charge (creation/modification of charge). This form is filed jointly by the company and the charge holder (Debenture Trustee). | Sec. 77 | Within 30 days of the charge creation |
Note on Form PAS-4 & PAS-5: These are internal records to be maintained by the company, not forms to be filed with the ROC (except that the Private Placement Offer Record in PAS-5 is a mandatory attachment to Form PAS-3).
📚 Mandatory Registers to be Maintained
The company must maintain the following statutory registers at its Registered Office:
Register of Debenture Holders: This is mandatory for every company that issues debentures.
- Form: Form MGT-2
- Contents: Detailed particulars of the debenture holders, their holdings, debenture certificate numbers, date of allotment, etc.
- Preservation: Must be preserved for a minimum period of eight years from the date of redemption of the debentures.
- Form: Form CHG-7
- Contents: Detailed particulars of the charge, including the Debenture Trustee, assets charged, amount secured, etc.
- Preservation: Must be permanently preserved.
- Form: Form PAS-5
- Contents: Serially numbered record of the Private Placement Offer Letter-cum-Application Form.
- Preservation: Must be preserved for eight years from the date of the offer or invitation.