Question : Which of the following statements is correct?
Option 1: Debentures Redemption Investment (DRI) can be used by a company for any purpose after the debentures have been redeemed.
Option 2: Debentures Redemption Reserve is not set aside in case the debentures are fully convertible into shares.
Option 3: Debentures Redemption Reserve is set aside, in the case of Partly Convertible Debentures, on the convertible part of the debentures.
Option 4: Debentures Redemption Reserve may be set aside by a company out of any reserve.
Correct Answer: Debentures Redemption Reserve is not set aside in case the debentures are fully convertible into shares.
Solution : Answer = Debentures Redemption Reserve is not set aside in case the debentures are fully convertible into shares.
Amount is not set aside to DRR by the companies that are exempted from transferring amount to DRR on the fully convertible Debentures; and on convertible part of Partly Convertible Debentures.
Hence, the correct option is 2.
