Board nod for bonus debentures

By Our Staff Correspondent

MUMBAI, OCT. 16. The board of Hindustan Lever (HLL) today approved a scheme for the issue of bonus debentures by drawing upon the general reserves of the company which have been created through retained earnings/undistributed profits.

The scheme entails issue and allotment of bonus debentures of the face value of Rs. 6 each in the ratio of one fully paid up debenture of Rs. 6 each for every Re 1 equity share held in the company on a record date to be fixed by the board after the scheme is sanctioned by the Bombay High Court.

The debentures would be secured, and redeemable at par in two equal instalments on the second and third anniversary of the issue. Shareholders can trade on the debentures post allotment, since they would be listed on the NSE and the BSE. The debentures would carry an interest rate of 9 per cent per annum payable annually. The debentures would be considered as a `deemed dividend' under the provisions of the Income Tax act. HLL would bear and pay, in addition, dividend distribution at 10.2 per cent on the issue from the general reserves.

The company's board has also adopted a resolution to raise the limit for foreign institutional investors' holding in HLL from 24 per cent to 49 per cent. This resolution too would be placed before the shareholders for their approval at an extraordinary general meeting.

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Section  : Business
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