Power to re-issue redeemed debentures in.. Sec 116

[bilalfca]

salam to all members.

someone plz guide me on this Sec 116 (1)

quote

"where either before or after the commencement of this ordinance a company has redeemed any debentures previously issued, unless the articles or the conditions of issue expressly otherwise provide, or unless the debentures have been redeemed in pursuance of any obligation on the company so to do, not being an obligation enforceable only by the person to whom the redeemed debentures were issued or his assigns, shall have power, and shall be deemed always to have had power, to keep the debentures alive for the purpose of re-issue....................... not previously bee issued"

unquoted.

"or unless the debentures have been redeemed in pursuance of any obligation................................ or his assigns," what does the it mean?
someone plz elaborate it...

thnx

[Ali Akbar]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by bilalfca</i>
<br />salam to all members.

someone plz guide me on this Sec 116 (1)

quote

"where either before or after the commencement of this ordinance a company has redeemed any debentures previously issued, unless the articles or the conditions of issue expressly otherwise provide, or unless the debentures have been redeemed in pursuance of any obligation on the company so to do, not being an obligation enforceable only by the person to whom the redeemed debentures were issued or his assigns, shall have power, and shall be deemed always to have had power, to keep the debentures alive for the purpose of re-issue....................... not previously bee issued"

unquoted.

"or unless the debentures have been redeemed in pursuance of any obligation................................ or his assigns," what does the it mean?
someone plz elaborate it...

thnx

<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Hi,

I can see application of section 271 and/or more specifically part X of the Ordinance where the Company may be required to redeem debentures through order of court. This may happen, if for example, the lenders of the Company (prior to issuance of new debentures) through financial covenant restricted Company within certain debt to equity ratio or Net debt to EBITDA ratio etc. In this case, the issuance of debentures may be legal in itself but since the scenerio after issuance of debentures disturbes financial position of the Company in such way to triger clause of another agreement which Company has with its lenders.

Let me know about your comments on it.

[bilalfca]

thanx for ur both replies ali akbar

in this sub-section i just want to know what is referred in this statement (or unless the debentures have been redeemed in pursuance of any obligation on the company so to do, not being an obligation enforceable only by the person to whom the redeemed debentures were issued or his assigns)?

1st obligation on the Co. means (to me) that unless the debentures are redeemed in acc. with the obligation created by the Co.(e.g, the Co. issued debentures and said that these debentures will be redeemed after 6 months (after 6 months it is obligation of the Co to redeem that debenture; m i correct?)

2nd what is meant by "not being an obligation enforceable only by the person............ or his assigns?"

what are the obligations and what is the nature of those obligations that are enforceable by "persons" other than the person mentioned above?

thnx..

[Ali Akbar]

You are welcome. Query wise reply is as under

1st the word 'obligation' after the word 'unless' (exception) doesnt mean the obligation under which company will redeem debentures on maturity. Had this word 'obligation' referred to a normal obligation on company to redeem on maturity, then exception would not have existed. Got it? Think from another perspective, if this obligation referred to normal obligation then this section would not have existed to give power to companies for re issuance of redeemed debentures. This obligation on company in exception refers to obligation (other than the obligation to repay on maturity which company agreed in debenture agreement and also the obligation to redeem before even maturity enforcable by debenture holder through debenture agreement (say in the event of default in regular payments)).

2nd The answer to second one flows from the first one. Consider the obligation on company enforceable by other lenders or shareholders through court to save their legally enforceable interest.