Author: Shaesta Irshad, Student at Bennett University, Times of India, Greater Noida
ABSTRACT
The fiduciary duties associated with the roles of trusteeship and custodianship of debentures are integral to the proper operation of the financial ecosystem. Debentures are a form of debt instrument utilised by corporations to raise capital from the general public. The responsibility of managing and safeguarding these funds lies with the trustees and custodians.
This abstract centres on the vegetative perspective vision of debenture trusteeship and custodianship. The responsibility of safeguarding the concerns of debenture holders is entrusted to trustees and custodians. The aforementioned objective can be achieved by ensuring that the issuer adheres to the provisions of the debenture trust deed and by safeguarding the assets that serve as collateral.
Statutes governing securities, trusts, and contracts are the primary sources of legislation controlling the function of debenture trusteeship and custodianship. These statutes create the majority of the relevant legal requirements. In most situations, the issuer or the holders of the debentures are the ones who are responsible for the nomination of trustees and custodians. The clauses that are contained in the trust deed or custody agreement are the ones that control the rights and obligations of these various persons.
The obligations of trustees and custodians in the legal realm include monitoring the issuer’s compliance with the debenture provisions, ensuring an adequate valuation and security of the assets held as collateral, and implementing appropriate measures in the event of a default or violation of the trust deed. In addition, trustees and custodians are responsible for ensuring an adequate valuation of the assets held as collateral.
To conclude, the duties of debenture trusteeship and custodianship are necessary in maintaining the stability and reliability of the financial system. Custodianship also plays an important role in this regard. The regulatory framework that is responsible for governing these positions creates a method for preserving the concerns of debenture holders and ensuring that issuers complete their commitments in accordance with the regulations.
