debenture ankur

8/14/2019 Debenture Ankur

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Presented byPresented

byAnkur SrivastavaAnkur Srivastava

BhuvneshBhuvnesh

BalajiBalajiBapiBapi

HitinHitinKrishnajiKrishnaji

Raj ShekharRaj ShekharGirdharilalGirdharilal

Dhanup SinghDhanup Singh

Abhay Kumar SinghAbhay Kumar Singh


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The most usual form of borrowing by a company

is by the issue of debentures. According tosec.2(12) debenture includes debenture stocks,bonds and any other securities of a companywhether constituting a charge on the assets of thecompany or not.

Debenture means a document which either createsa debt or acknowledges it, and any document

which fulfills either of these conditions is adebenture.


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It is issued by a company and is usually in theform of a certificate which is anacknowledgement of indebtedness

It is issued under the companys seal. It neednot, however, be necessarily under the

companys seal.

It is one of series issued to a number of lenders.


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It usually specifies a particular

period or date as the date ofrepayment

It generally creates a charge on theundertaking of the company or someparts of its property ; but there may

be debentures without any suchcharge.

A debenture holder does not have

any right to vote in the company


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Bearer debenture : These debentures alsoknown as unregistered debentures, are payableto its bearer. These are regarded as negotiable

instruments and are transferable by delivery. Registered debentures: These are the

debentures which are payable to the registerholders. These are transferable in the mannerspecified in the conditions endorsed thereon.

These are not negotiable instruments


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Secured debentures : - Debentures whichcreate some charge on the property of thecompany. The charge may be a fixed charge or

a floating charge Unsecured or naked debenture :- Debentures

which do not create any charge on the assets ofthe company. The holders of these debentureslike ordinary unsecured creditors may sue thecompany for recovery of the debt.


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Redeemable debentures :- Debentures areusually issued on the condition that they shall

be redeemed after a certain period. They maybe re-issued after redemption in accordancewith the provisions of section. 121.


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Irredeemable debentures :- A debenture willbe treated as irredeemable where either there isno period fixed for repayment of the principalamount or repayment of it is made conditionalon the happening of an event which may nothappen for an indefinite period or may happenonly in certain specified and contingent events.


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Convertibility debentures :- These debenturesgive an option to the holders to convert theminto preference or equity shares at stated rates

of exchange, after a certain period. If theholders exercise the right of conversion, theycease to be lenders to the company and becomemembers instead.


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Non-convertible debentures :- Thesedebentures do not give any option to theirholders to convert them equity shares. They

are to be duly paid as and when they aremature.


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First debentures :- These are the debentureswhich are to be repaid in priority to otherdebentures which may be subsequently issued.

Second debentures :- These are the debentureswhich are to be paid after the first

debentures have been redeemed.

04/08/09 12Share, Capital and Debentures


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Debentures are usually issued in a series with apari passu clause. In such a case they are to bedischarged ratable, though issued at different

and varying times. In the event of a deficiencyof assets to satisfy the whole debt secured bythe issue of debentures, they will abateproportionately.

04/08/09 13Share, Capital and Debentures


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The trust deed contains the terms and conditions endorsed in

the debentures and defines the rights of debenture-holders and

the company. It usually empowers the trustees to appoint a

receiver to protect their interest. I t also contains other

provisions concerning meeting of the debenture-holders

supervision of the assets charged, and the keeping of a register

of a debenture holders. Whenever ther is a default by the

company, the security is enforced or action is taken by the

trustees on behalf of all the debenture-holder


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Question?


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debenture ankur

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