DEBENTURES AND TYPES

By, K.SRINIVAS TEJA ROLL No :1234111108

DEBENTURE
A Debenture is a written instrument or an acknowledgement a debt and containing provisions as regards and repayment of principal and payment of interest at a fixed rate!!!!!! According to the companies act 1956 Ait includes stocks ,bonds and any other securities of a company constituting a change of assets.

Feature of Debentures
The main features of debentures are: 1.Fixed intrest rate: The rate of intrest payable on debentures is fixed and is payable on the face value of the debentures. 2.NO Voting Rights:The debentures holders do not enjoy voting rights except at their class meetings .They do not have the rights to elect the directors and to participate in the managments. 3.The debentures are a liability to the company .And those companies which are registered under the Companies act 1956 can issue Debentures

Types Of Debentures

Unsecured Debentures

These are those which are not secured on any asset. The holders of these debentures
are considered as ordinary Creditors by the companies.

Secured Debentures
These are the debentures which are secured by a common asset or by a particular asset . These are not exceeding to 18 months which must be secured According to the SEBI rules.

SEBI:Securities and Exchanges Board of India.

First Mortgage Debentures

These are the ones which have the first claim on assets. In simple words we can say that the these are the ones which are the PRIMARY CREDITORS SECOND Mortgage Debentures: These are the ones which have the second claim on the assets.

Redeemable Debentures
These can be transferred only by executing a transfer deed. The interest is paid to the registered holder. IRREDEEMABLE: These are those which are not redeemable during the life time of the company. These are also called the perpetual debentures.

REGISTERED
These are those which are payable to the persons whose names appear in Registrar of Debentures Holders. These can be transferred only by executing a transfer deed. Interest is paid by the registered holder.

Convertible AND Non Convertible

These are those kind which have a right to convert them into shares. The conversion takes place as per terms of issue. Non convertible are those where the holders of which have a right to convert into shares . The debentures are deemed to be a non convertible debentures.