The Companies Act goes further and actually distinguishes between the types of instruments which form part of a debenture and those which are excluded from its scope as follows.

A debenture includes:

  • a debenture stock;
  • a convertible debenture;
  • a bond or an obligation;
  • a loan stock;
  • an unsecured note; or
  • any other instrument executed, authenticated, issued or created in consideration of such a loan.

The term debenture excludes the following:

  • a bill of exchange;
  • a promissory note;
  • a letter of credit;
  • an acknowledgement of indebtedness issued in the ordinary course of business for goods or services supplied; or
  • a deposit certificate, pass book or other similar document issued in connection with a deposit or a current account at a banking company.

Debenture Holders’ Representative

Under the Companies Act, any transaction involving the issuance of debentures of the same class to more than 25 persons requires that a debenture holders’ representative (Representative) be appointed. The Representative’s role is to ensure that the debenture issuer complies with all the terms and conditions specified in the debt instrument for the debenture holder’s rights. The Representative, in other words, steps in the shoes of the debenture holders and acts in their interests and on their behalf to ensure that the issuer does not violate the terms and conditions of the debt instrument.

Appointment

The appointment the Representative is made under an agency deed which is valid upon the signature of the Representative.

Who can act as one?

A notary, an attorney at law, a banking or insurance company, a qualified auditor, an investment trust company, or any other corporation or person who has been duly authorised by the Minister to whom the responsibility of corporate affairs is designated may act as a Representative.

Powers of a Representative

The powers of a Representative are listed in paragraph 3 of the Sixth Schedule of the Companies Act. In essence, a Representative is able to:

  • act in his own name on behalf of the debenture holders;
  • represent the debenture holders in all matters affecting the debentures and their rights and obligations under the agency deed; and
  • enforce securities which have been offered.

One of the main advantages of having a Representative is that there is a primary contact in all matters affecting the debentures themselves and is much easier for the debenture holders to coordinate their actions, if need be, against the issuer in cases of default.

Share
Twitter LinkedIn Email Save as PDF
More Publications
14 May 2024

What are the tools to aid the arbitral process to combat the undesirable effects of parallel litigation?

The fundamental aspect of arbitration as an alternative dispute mechanism is that despite parties’...

29 Apr 2024

Appleby Mauritius Quarter One Newsletter 2024

As we navigate through this dynamic year, Appleby's first Mauritius newsletter of 2024 sees our team...

29 Apr 2024

Receivership: an enforcement mechanism for lenders

In a world of business, unforeseen circumstances can often arise that lead a company to financial di...

29 Apr 2024

The JCPC reaffirmed the exception to the bank secrecy rule

Further to the oral judgment of the Judicial Committee of the Privy Council (JCPC) on 06 July 2023 a...

26 Apr 2024

Regulation of Moneylending in Mauritius

Moneylending is a crucial credit device in the world of financial services which plays a significant...

26 Apr 2024

Katra Holdings Ltd v Standard Chartered Bank (Mauritius) Ltd [2024] UKPC 8 - case summary

The Privy Council set aside an appeal challenging a winding up order of a Mauritian company, Katra H...

26 Apr 2024

Statutory Demands - a Review of Recent Decisions

INSOLVENCY - The bankruptcy division of Mauritian Supreme Court re-affirms the test to determine the...

26 Apr 2024

Directors' Duties in the face of insolvency

The duties of directors in relation to companies in Mauritius are laid out under the Companies Act 2...

16 Apr 2024

Absence of assets in Mauritius – not a bar to the recognition and enforcement of foreign judgment

On 12 April 2024, the Mauritian Supreme Court confirmed in Hobler v Harker 2024 SCJ 159, that an app...

12 Apr 2024

Maximising Efficiency in Fund Termination Through Liquidating Trusts in Mauritius

When it comes to terminating a fund licensed under the laws of Mauritius (Company), one of the key r...