96. Reissue of redeemed debentures Flashcards
- Reissue of redeemed debentures
General overview
[96.01] Section 96 enables a company to reissue debentures that have been repaid. The purpose of reissuing debentures is to fit into the existing quota that a company may have provided for in its constitution. Section 96(2) provides that the person entitled to the reissued debentures shall have the same priority as if the debentures had never been redeemed. This subsection is significant in the event that the priority becomes an issue has to be determined by the courts.
[96.02] Unless expressly or impliedly provided to the contrary, whether in the constitution or in any contract with the company, a company shall always have, and shall always be deemed to have, the power to reissue the debentures. Such reissue or issue of one debenture in place of another shall not be regarded as the issue of a new debenture for the purpose of any provision limiting the amount or number of debentures that may be issued by the company: s 96(1). The debentures which were re-issued, or those which were issued in their place, must contain the same provisions as to redemption as the original debentures which had been redeemed. Therefore, on the true construction of s 75 of the Companies Act, 1929 (UK) (equivalent to s 96), the company, if it redeemed the second and third stock, could re-issue only the same debentures or other debentures having the same provisions in every respect, and the debentures so re-issued, or those issued in their place, could not bear a date for redemption different from the date for redemption of the debentures which they replaced: In re the Antofagasta (Chili) and Bolivia Railway Co Ltd’s Trust Deed, The Co v Schroder and Ors [1939] Ch 732, Ch D .
[96.03] Section 96(1) has reversed the common law position that a company which has once issued debentures to the full authorised amount cannot, in the absence of express power, reissue debentures that have been paid off. A reissue is, in substance, the creation of a fresh charge, and semble, the reissued debentures require restamping
