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Unit 5: Primary Market

3. Registrar and transfer agent are under obligation to observe various codes of conduct Notes
prescribed by the SEBI for merchant bankers and underwriters. Alongside this, they have
to ensure that enquiries from investors are promptly dealt with and adequate steps are
taken for proper allotment of securities and quickly refund of excess application money as
per law.
Debenture Trustees

A company contemplating to issue debentures to raise long-term funds from the market has to
appoint a trustee to safeguard the interests of the debenture holders. The following may be
appointed as debenture trustee:
1. A scheduled bank, or
2. A public financial institution, as defined in Section 4A of the Companies Act, 1956, or
3. An insurance company, or

4. A body corporate.
Tasks and Responsibilities of Debenture Trustees

The SEBI has laid down the following guidelines with respect to tasks and responsibilities of
debenture trustees:
1. A debenture trustee must get certificate of registration from the SEBI for acting as trustee.
The SEBI issues the certificate on being satisfied about the adequacy of the infrastructure of
the applicant, its expertise and experience and professional qualification for a debenture
trustee from an institution recognized by the government in finance, accountancy, law or
business management.

2. A debenture trustee must accord consent in writing to the body corporate to act as debenture
trustee before the debenture trustee.
3. A debenture trustee shall take possession of the trust property as per provisions of the
Deed.
4. A debenture trustee shall carry out inspection of books of accounts/records/documents
and registers and trust property.
5. A debenture trustee shall enforce security in the interest of debenture holders.
6. A debenture trustee shall have to abide by various codes of conduct issued by the SEBI on
1-10-2003. Important among these codes are:
(a) Make all efforts to protect the interests of debenture holders;
(b) Maintain high standards of integrity, dignity and fairness in the conduct of the
business;
(c) Fulfil its obligations in a prompt, ethical and professional manner;
(d) Exercise due diligence, care and independent professional judgement;
(e) Avoid conflict of interest and make adequate disclosure of its interest;

(f) Put in place a mechanism to resolve any conflict of interest;
(g) Not indulge in any unfair competition, which is likely to harm the interest of other
trustees or debenture holders;

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