Duties of a debenture trustee under SEBI rules

The duties of a debenture trustee are set out in one regulation, and SEBI replaced the whole of it in February 2025. The current list runs to 20 clauses covering the offer document, the covenants, the security, the money raised, the meetings, and the escalation to SEBI. This guide walks the list in the order the work actually happens, and flags the sub-regulations that carry the trustee's powers rather than its obligations. It is not investment advice.

When was the duties list last rewritten?

February 10, 2025. Regulation 15(1) was substituted in full by the SEBI (Investor Charter) (Amendment) Regulations, 2025 with effect from that date. The version it replaced ran to clause (n). The current version runs to clause (t) and reorders the material as well as extending it.

Two consequences follow for anyone citing this regulation. Clause letters moved, so a citation to a clause taken from pre-2025 material may now point at different text. And the same amendment inserted Regulation 14C requiring compliance with the Investor Charter, so the duties and the published service standards were tightened together.

What must the trustee do before the money is raised?

Check the documents against each other. Regulation 15(1)(a) requires the trustee to satisfy itself that the prospectus or letter of offer does not contain any matter inconsistent with the terms of the issue of debentures or with the trust deed. Clause (b) requires it to satisfy itself that the covenants in the trust deed are not prejudicial to the interest of the debenture holders.

Regulation 15(6) adds the security check before a charge is created. The trustee must exercise independent due diligence to ensure the security is free from any encumbrance, or that it has obtained the necessary consent from other charge-holders where the security has an existing charge, in the manner specified by SEBI.

What are the continuing monitoring duties?

Six of them, running on different cycles.

Regulation 15(1A) adds the project financing layer: obtain reports from the lead bank on project progress, monitor utilisation of funds raised, and obtain a statutory auditor certificate on utilisation during the implementation period and, for debentures issued to finance working capital, at the end of each accounting year.

What happens when something breaks?

Communication first, then structural intervention. Clause (d) requires the trustee to communicate promptly to debenture holders any defaults on payment of interest or redemption, and the action it took. Clause (g) requires it to inform holders immediately of any breach of the terms of issue or of the trust deed covenants. Clause (p) requires appropriate measures to protect holders as soon as any breach of the trust deed or law comes to its notice.

Clause (r) escalates outside the deal: inform SEBI immediately of any breach of the trust deed or provision of any law that comes to the trustee's knowledge. The Explanation to clause (r) permits communication to debenture holders under these regulations to be made by electronic media, press release, or a notice placed on the trustee's website.

Clause (e) is the structural one. The trustee appoints a nominee director on the board of the company on any of three events:

1. Two consecutive defaults in payment of interest to the debenture holders
2. Default in creation of security for debentures
3. Default in redemption of debentures

Clause (j) requires the trustee to do such acts as are necessary in the event the security becomes enforceable, and clause (o) to take possession of trust property in accordance with the trust deed.

Who can call a meeting of debenture holders?

Both sides, on different triggers. Regulation 15(2) requires the trustee to call, or cause the issuer to call, a meeting of all debenture holders on either a requisition in writing signed by at least one-tenth of the debenture holders in value for the time being outstanding, or the happening of any event constituting a default or breach of covenants as specified in the offer document, information memorandum or trust deed, or which in the trustee's opinion affects holders' interest.

Two provisos qualify it. The trustee may seek consent of debenture holders through e-voting wherever applicable. And the requirement to convene a meeting of all holders on a default in payment obligation does not apply to debentures issued by way of public issue.

Clause (l) states the duty side of the same point: take steps to convene a meeting of holders as and when one is required to be held.

What are the duties at the end of the issue?

Clause (m) requires the trustee to ensure the debentures have been converted or redeemed in accordance with the terms of the issue. Clause (q) requires it to ascertain and satisfy itself on four dispatch and payment points, including that debenture certificates were dispatched within 30 days of registration of the charge with the Registrar of Companies where the certificate follows an allotment letter, that certificates were dispatched or debentures credited to demat accounts, that interest warrants went out on or before the due dates, and that holders were paid the monies due on the date of redemption.

Regulation 15(3) prevents an exit that leaves holders unrepresented: no debenture trustee shall relinquish its assignment in respect of a debenture issue unless and until another debenture trustee is appointed in its place by the body corporate.

Regulation 15(4) covers capital. The trustee must maintain the net worth requirements on a continuous basis, inform SEBI immediately of any shortfall, and in that case may not undertake new assignments until it restores net worth within the time SEBI specifies.

Which provisions give the trustee powers rather than duties?

Regulation 15A, inserted with effect from October 27, 2025, which is the counterpart to this duties list. It lets a trustee inspect the issuer's books, records, registers and the trust property to the extent necessary, call for information and documents from the issuer and from specified intermediaries, and utilise the Recovery Expense Fund with the consent of debenture holders. Regulation 15(7) separately allows the trustee, subject to holder approval and SEBI's conditions, to enter into inter-creditor agreements under the RBI framework.

Alongside both sits Regulation 16, requiring every debenture trustee to abide by the Code of Conduct in Schedule III, and Regulation 17(1), requiring books, records and documents relating to trusteeship functions to be kept for not less than five financial years from the date of redemption of debentures.

Related reading

The powers that make these duties exercisable are covered in what rights does a debenture trustee have, and the businesses a trustee may run alongside trusteeship are in what activities can a debenture trustee undertake. The covenant monitoring duty is detailed in what happens when a bond covenant is breached, the default machinery in what is an event of default on a debt security, and the published service standards in what is the debenture trustee investor charter.

The duties of a debenture trustee are a defined, recently rewritten list with dated effect, and each one produces a disclosure or a filing somewhere. Flock reports what issuers and trustees disclose, with the source and the date attached. It is not investment advice.