Class 12 SP Letter for Redemption of Debentures: Format & Solved Draft (Chapter 7)
Master the official format and scoring guidelines for the Class 12 Secretarial Practice (SP) letter on the Redemption of Debentures tailored for the Maharashtra State Board (HSC) Commerce examination. Under Chapter 7 (Correspondence with Debenture Holders), drafting a formal notice informing a debenture holder about the impending maturity of their debt instrument and the procedure for repayment is a highly practical question in Question 7 (Letter Writing), carrying a direct weightage of 5 marks. Below, you will find the official board exam scenario, step-wise marking breakdown, statutory provisions under the Companies Act, 2013, and a textbook-accurate solved model answer.
Statutory Rule (Section 71, Companies Act 2013): Redemption of debentures means the repayment of the principal amount of the borrowed capital to the debenture holders upon the expiry of the stipulated term. A company must create a Debenture Redemption Reserve (DRR) out of its divisible profits to ensure sufficient liquidity is available to honour this repayment obligation.
HSC Board Examination Question Scenario
In the HSC examination, this question is typically framed as follows:
"Draft a letter to a debenture holder informing him / her that their debentures are due for redemption, requesting them to surrender the Debenture Certificate."
Official HSC Step-Wise Marking Breakdown (5 Marks)
Examiners evaluate secretarial correspondence based on structural completeness and accurate procedural instructions:
| Component | Required Exam Content | Marks |
|---|---|---|
| Letterhead & Layout | Company Name, Registered Address, 21-digit CIN, Phone, Email, Website, Ref. No., and Date. | 1 Mark |
| Inside Address & Subject | Debenture Holder's Name, Address, concise Subject Line, and formal Salutation. | 1 Mark |
| Body of the Letter | Reference to maturity date, Board resolution, redemption schedule table, and instructions to surrender the original certificate. | 2 Marks |
| Sign-off & Enclosures | Complimentary close ("Yours faithfully"), Secretary signature block, and Enclosure (Discharge Receipt / Redemption Form). | 1 Mark |
| Total Marks | Question 7 (Attempt Any 2 Letters out of 3 = 10 Marks Total) | 5 Marks |
Solved Model Answer: Letter Regarding Redemption of Debentures
APEX STEEL INFRA LIMITED
Registered Office: 21, Nariman Point, Mumbai - 400021.
CIN: L27100MH2008PLC998877
Phone: 022 - 6655 4433
Email: secretarial@apexsteel.com
Website: www.apexsteel.com
Ref. No.: ASIL/RED/2026-27/115
Date: 10th February 2027
To,
Mr. Anil M. Deshmukh,
Plot No. 18, Sadashiv Peth,
Pune - 411030.
Subject: Redemption of 10% Non-Convertible Debentures.
Dear Sir,
This is to formally inform you that the 10% Secured Non-Convertible Debentures (NCDs) issued by the company in March 2022 are due for redemption (repayment) on 31st March 2027, upon the completion of their 5-year tenure.
In accordance with the terms of the Debenture Trust Deed, the Board of Directors, at their meeting held on 5th February 2027, has passed a resolution authorizing the redemption of these debentures out of the Debenture Redemption Reserve (DRR) maintained by the company.
The particulars of the debentures held by you and the redemption amount payable are set out in the schedule below:
| Folio No. | Debenture Certificate No. | No. of Debentures Held | Distinctive Numbers (From - To) | Total Redemption Amount Payable (₹) |
|---|---|---|---|---|
| D-1025 | 450 | 100 | 15001 - 15100 | 10,000/- |
You are requested to surrender the original Debenture Certificate No. 450 along with the enclosed 'Discharge Receipt' duly signed and affixed with a ₹ 1/- revenue stamp. Please submit these documents to the Registered Office of the company on or before 15th March 2027.
Upon receipt and verification of the aforesaid documents, the redemption amount will be directly credited to your registered bank account via NEFT / RTGS on the date of maturity.
Thanking you.
Yours faithfully,
For Apex Steel Infra Limited
(Signature)
Mr. Rajesh Mehta
Company Secretary
Encl: Debenture Discharge Receipt / Redemption Form
Examiner's Secret: 3 Critical Points for Scoring Full Marks
- Procedural Accuracy: Money is not sent in this letter! This letter is merely an intimation asking the holder to surrender their original certificate. A company cannot legally repay the principal until the physical debt instrument is returned and cancelled.
- Mention of DRR: Mentioning that the repayment is being made "out of the Debenture Redemption Reserve (DRR)" signals to the examiner that you have a strong grasp of corporate finance law.
- Discharge Receipt: The enclosure must be a "Discharge Receipt" (or Redemption Form). The debenture holder signs this to legally acknowledge that their claim against the company will be fully settled upon payment.
Frequently Asked Questions (HSC Board Exam FAQs)
1. What is meant by the 'Redemption' of debentures?
Redemption means discharging the company's liability by repaying the principal borrowed amount to the debenture holders on the maturity date as per the terms of the issue.
2. What is a Debenture Redemption Reserve (DRR)?
Under Section 71(4) of the Companies Act, 2013, a company issuing non-convertible debentures must create a DRR out of profits available for payment of dividend. This ensures the company has adequate funds for repayment and protects the creditors' interests.
3. Can debentures be redeemed before maturity?
Yes, if the terms of the issue (or the Debenture Trust Deed) permit, a company can redeem debentures prematurely, either by purchasing them from the open stock market or through a call option.