Question : Choose which of the following statements is true?
Option 1: Surplus, i.e., Balance in Statement of Profit and Loss cannot be transferred to Debentures Redemption Reserve.
Option 2: At least 10% of the redeemable value of debentures should be set aside to Debentures Redemption Reserve before the redemption of debentures.
Option 3: Debentures can be redeemed out of capital except by Unlisted companies that are not NBFCs or HFCs.
Option 4: Unlisted NBFCs and HFCs cannot redeem debentures out of capital alone because they haveto transfer amount to Debentures Redemption Reserve.
Correct Answer: Debentures can be redeemed out of capital except by Unlisted companies that are not NBFCs or HFCs.
Solution : Answer = Debentures can be redeemed out of capital except by Unlisted companies that are not NBFCs or HFCs.
Surplus, i.e., Balance in the Statement of Profit and Loss, cannot be transferred to Debentures.
Redemption Reserve. At least 10% of the redeemable value of debentures should be set aside for Debentures Redemption Reserve before the redemption of debentures. Debentures can be redeemed out of capital except by Unlisted companies that are not NBFCs or HFCs, and Unlisted NBFCs and HFCs cannot redeem debentures out of capital alone because they have to transfer the amount to Debentures Redemption Reserve.
Hence, the correct option is 3.
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