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Board Resolution for Issue of NCDs
CERTIFIED TRUE COPY OF THE BOARD RESOLUTION
Passed at the Meeting of the Board of Directors
________________
CIN: ________________
Date of Meeting: __________ at __________ Hours at the Registered Office of the Company.
SUBJECT: Issue and Allotment of Non-Convertible Debentures on Private Placement Basis
RESOLVED THAT pursuant to the provisions of Sections 23, 42, 71 and other applicable provisions of the Companies Act, 2013, the consent of the Board be and is hereby accorded to issue and allot ________________ Non-Convertible Debentures (NCDs) having a face value of Rs. ________________/- each, aggregating to Rs. ________________/-, bearing interest at ______% p.a. for a tenure of ______ years.
RESOLVED FURTHER THAT Debenture Certificates be issued in favour of the respective allottees under the Common Seal of the Company.
Signature
Board Resolution for Issue and Allotment of Non-Convertible Debentures on Private Placement Basis
Corporate Finance Documentation for Indian Companies
Introduction
A Board Resolution for Issue and Allotment of Non-Convertible Debentures (NCDs) on Private Placement Basis is a formal corporate document that records the Board of Directors' consent to raise debt capital by issuing NCDs to identified investors. Under the Companies Act, 2013 and the rules made thereunder, companies proposing to issue debentures on a private placement basis must obtain prior board approval. NCDs are debt instruments that cannot be converted into equity shares and provide fixed returns to investors in the form of interest.
This resolution specifies the number of NCDs to be issued, face value per debenture, aggregate consideration, interest rate, tenure, and details of identified allottees. The document authorises the issuance of debenture certificates under the company's common seal. It is essential documentation for compliance with private placement provisions and is commonly required when companies seek to raise funds through debt instruments from a select group of investors rather than through public offerings.
Benefits of Using a Standard Format
Utilising a professionally drafted board resolution format ensures that all statutory requirements under the Companies Act, 2013 and relevant rules are properly addressed. A ready-to-use template saves valuable time during board meetings, reduces the risk of procedural errors, and provides a consistent framework that captures essential details including allottee information, NCD particulars, interest rates, and tenure.
Standardised formats ensure compliance with private placement regulations.
Relevance to Corporate Finance
The issuance of NCDs is a significant corporate finance activity. Following Company Registration, businesses may choose to raise capital through debt instruments such as NCDs as an alternative to equity dilution or bank borrowings. The private placement route allows companies to approach identified investors directly.
Companies must comply with provisions relating to creation of debenture redemption reserve, appointment of debenture trustees (where applicable), and filing requirements with the Registrar of Companies.
Board Resolution for Issue and Allotment of NCDs – Sample Format
Company Name: _______________________________________
CIN: _______________________________________
Registered Office: _______________________________________
Email: _______________________________________
CERTIFIED TRUE COPY OF THE BOARD RESOLUTION
Passed at the Meeting of the Board of Directors of the Company
Date of Meeting: __.__.______
Time: ______ (Hours)
Venue: Registered Office of the Company
SUBJECT: ISSUE AND ALLOTMENT OF NON-CONVERTIBLE DEBENTURES ON PRIVATE PLACEMENT BASIS
"RESOLVED THAT pursuant to the provisions of Sections 23, 42, 71 and other applicable provisions of the Companies Act, 2013 (as amended from time to time) read with the rules made thereunder, including the Companies (Prospectus and Allotment of Securities) Rules, 2014 and the Companies (Share Capital and Debentures) Rules, 2014 (as amended from time to time), and subject to the Articles of Association of the Company, the consent of the Board of Directors be and is hereby accorded to issue and allot ____________ (Number) Non-Convertible Debentures (NCDs) having a face value of Rs. ____________/- (Rupees ____________ Only) each, aggregating to a total consideration of Rs. ____________/- (Rupees ____________ Only) on a private placement basis, bearing interest at the rate of ______% per annum for a tenure of ______ (____) years, to the following identified persons:
| Sr. No. | Name of Allottee | No. of NCDs | Amount (Rs.) | Tenure | Interest Rate (p.a.) |
|---|---|---|---|---|---|
| 1 | |||||
| 2 | |||||
| TOTAL | |||||
RESOLVED FURTHER THAT the issue and allotment of the above-mentioned NCDs shall be made in accordance with the applicable provisions of the Companies Act, 2013 and the rules made thereunder.
RESOLVED FURTHER THAT Debenture Certificates representing the above-mentioned NCDs be issued in favour of the respective allottees, and such Debenture Certificates be signed by the Directors of the Company and countersigned by the authorised signatory under the Common Seal of the Company (if applicable).
RESOLVED FURTHER THAT any Director or the Company Secretary of the Company be and is hereby authorised to do all such acts, deeds, matters, and things, and to execute all such documents, instruments, and writings as may be necessary to give effect to these resolutions, including but not limited to:
- Filing of Form PAS-3 (Return of Allotment) with the Registrar of Companies;
- Creating necessary entries in the Register of Debenture Holders;
- Making entries in the books of accounts of the Company;
- Executing any other documents as may be required to complete the allotment."
For ________________________________________
(Name of the Company)
Signature: __________________________
Name: __________________________
Designation: __________________________
DIN: __________________________
Frequently Asked Questions
1. Can a board resolution for issue and allotment of NCDs on Private Placement basis be passed without a physical or virtual board meeting?
Generally, matters involving issue of securities require deliberation at a duly convened board meeting. However, if the company's Articles of Association permit resolutions to be passed by circulation, directors may consider matters without a physical or virtual meeting. For significant matters like NCD issuance, it is advisable to convene a proper board meeting for thorough discussion and compliance.
2. Who can be considered as an authorized signatory for the board resolution for issue and allotment of NCDs on Private Placement basis?
Any director present at the board meeting or the company secretary (if appointed) may be authorised to sign the certified true copy of the resolution. The Board typically designates one or more directors to execute documents related to the NCD issuance, file required forms with the ROC, issue debenture certificates, and represent the company before regulatory authorities.
3. Are there any specific requirements for the format of the board resolution for issue and allotment of NCDs on Private Placement basis?
The resolution should reference the applicable sections of the Companies Act, 2013 (Sections 23, 42, 71) and relevant rules. It must specify the number of NCDs, face value, aggregate consideration, interest rate, tenure, and details of allottees. The resolution should also authorise issuance of debenture certificates, filing of Form PAS-3, and entries in the Register of Debenture Holders.
4. Does the Board Resolution for issue and allotment of NCDs on Private Placement basis need to be certified by a professional?
There is no statutory requirement for the board resolution to be certified by an external professional. The certified true copy may be signed by any director or the company secretary. However, for filing Form PAS-3 with the ROC, a practising Chartered Accountant, Company Secretary, or Cost Accountant may be required to certify the form.
5. Can a board resolution for issue and allotment of NCDs on Private Placement basis be passed without convening a board meeting?
While the Companies Act permits certain resolutions to be passed by circulation, matters involving issuance of securities are typically considered at duly convened board meetings. The Articles of Association should be consulted to determine if resolution by circulation is permitted for such matters. Standard practice recommends conducting a proper board meeting for NCD issuances.
6. Who can certify a board resolution for issue and allotment of NCDs on Private Placement basis?
The certified true copy of the board resolution may be signed by any director of the company or the company secretary (if appointed). The person certifying should have been present at the meeting or have access to the minutes. For statutory filings, additional certification by a practising professional may be required as per form-specific requirements.