Debenture
Q2:-What is a Debenture? How many types are there? What is the difference between a Shareholder and a Debenture Holder?
Definition of Debenture
A debenture is a certificate of acceptance for a loan taken by a company, on which all terms related to the loan are written.
For example:-
• Face Value
• Interest rate
• Date of maturity
• Method of redemption of debenture
By issuing debentures, the company obtains long-term loans. Debenture holders are not members of the company but are creditors. They do not have the right to vote.
Types of Debentures
1. Naked Debentures: These are debentures whose holders are not given any security. They are called Naked Debentures.
2. Mortgage Debentures: These are debentures whose holders are definitely given some security. They are called Mortgage Debentures.
These are the most secure. General companies usually issue these.
3. Redeemable Debentures: These are debentures whose payment is made by the company during its lifetime. They are called redeemable debentures.
4. Irredeemable Debentures: These are debentures whose payment is not made by the company during its lifetime. They are called irredeemable debentures.
Generally, companies do not issue this type of debenture.
5. Bearer Debentures: These are debentures where the name of the holder is not written in the register of debenture holders. They are called bearer debentures. They can be transferred only by delivery.
6. Registered Debentures: These are debentures where the name of the holder is written in the register of debenture holders. They are called registered debentures.
Comments
Post a Comment