Companies planning to raise funds by way of non-convertible debentures should get the proposal approved by shareholders through a special resolution within six months, according to the government.
In this regard, the Corporate Affairs Ministry has amended the Companies (Prospectus and Allotment of Securities) Rules.
The rules are part of the new Companies Act, which is being implemented by the Ministry.
“In case of an offer or invitation for non-convertible debentures referred to in the second proviso, made within a period of six months from the date of commencement of these rules, the special resolution referred to in the second proviso may be passed within the said period of six months from the date of commencement of these rules,” it said in a notification dated June 30.
Under the new companies law, entities planning to raise funds should get the proposal approved by shareholders through a special resolution.
The new legislation, many of whose provisions came into force from April 1, provide for strict rules to prevent misuse of funds raised by companies from the public.
Among others, the prospectus issued for raising funds should specify the objects of the issue and purpose for which there is a requirement of funds.