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Commercial Correspondence and Secretarial Practice · Class 12 Commerce

Ch 3Debenture — Class 12 Commercial Correspondence and Secretarial Practice, concept-first.

When a company needs funds beyond what its own shareholders are willing to contribute as share capital, one of the principal routes open to it is borrowing — and the instrument through which a company borrows from the investing public, acknowledging that debt in a written, transferable form, is called a debenture.

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Key concepts

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Meaning and Nature of a Debenture

A debenture is a written acknowledgment of a debt taken by a company, evidencing a loan on which the company promises to pay a fixed rate of interest and to repay the principal on or by a specified date or event.

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Chapter contents

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Meaning and Definition of a Debenture

When a company needs funds beyond what its own shareholders are willing to contribute as share capital, one of the principal routes open to it is borrowing — and the instrument through which a company…

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Features of a Debenture

A debenture carries a distinct set of features that separate it sharply from a share, and recognising these features is what allows a student to correctly classify any instrument a company issues.

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Debenture-Holder as a Creditor: Debenture-Holder Compared with Shareholder

One of the most fundamental distinctions a Secretarial Practice student must be able to draw with confidence is the difference between a debenture-holder and a shareholder, because the two are frequen…

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Types of Debentures

Debentures are classified on several independent bases at once, and a company's actual debenture issue is usually described by combining a term from each basis — for instance, a "secured, redeemable,…

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Procedure for Issue of Debentures under the Companies Act, 2013

Issuing debentures is not a matter the company's officers can simply decide informally — the Companies Act, 2013, read with the Companies (Share Capital and Debentures) Rules, 2014, lays down a define…

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Redemption of Debentures

Redemption of debentures means the repayment, by the company, of the amount borrowed from debenture-holders, in accordance with the terms fixed at the time of issue.

Exercises

+Show 13 questions13 questions
  1. Q1Define a "debenture" under the Companies Act, 2013.Free
  2. Q2State the main features of a debenture.Free
  3. Q3Distinguish between a shareholder and a debenture-holder of a company.Free
  4. Q4Why is a debenture-holder described as a creditor of the company and not as its owner?Preview
  5. Q5Explain the different types of debentures on the basis of security.Preview
  6. Q6Distinguish between redeemable and irredeemable debentures.Preview
  7. Q7Explain convertible and non-convertible debentures. What approval does the Companies Act, 2013 require before a company issues convertible d…Preview
  8. Q8Distinguish between registered and bearer debentures.Preview
  9. Q9What are "first" and "second" debentures? Explain the basis on which they are distinguished.Preview
  10. Q10Explain the procedure a company must follow to issue debentures under the Companies Act, 2013.Preview
  11. Q11What is a debenture trust deed? Explain the role of a debenture trustee.Preview
  12. Q12What is a Debenture Redemption Reserve? Explain its purpose.Preview
  13. Q13Explain the various methods by which a company may redeem its debentures.Preview

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 14 questions14 questions
  1. Q1What is the name of the agreement between a company and debenture holders? (a) Debenture Trust Deed (b) The Agreement of Acquiring Trust (c)…Preview
  2. Q2What type of capital is Debenture for a company?Preview
  3. Q3What particulars are included in Debenture Trust Deed?Preview
  4. Q4Explain any 3 types of Debenture.Preview
  5. Q5What is the name of the agreement between a company and debenture holders? (a) (A) Debenture Trust Deed (b) (B) The Agreement of acquiring T…Preview
  6. Q6What is the status of a debenture holder in a company? (a) (A) Creditor (b) (B) Debtor (c) (C) Debtor-Creditor (d) (D) ShareholderPreview
  7. Q7What is Mortgage Debenture?Preview
  8. Q8Explain Partly Convertible Debenture.Preview
  9. Q9What particulars are included in the Debenture Trust Deed?Preview
  10. Q10According to whom, "Debenture is a type of document issued under the common seal of the company acknowledging the debt"? (a) (A) Sir Francis…Preview
  11. Q11Who appoints the trustee of debenture? (a) (A) The Company itself (b) (B) The Assembly of Directors (c) (C) General Assembly (d) (D) The Ass…Preview
  12. Q12What is a Debenture Trust Deed?Preview
  13. Q13What is the meaning of certification of debenture?Preview
  14. Q14Clarify the procedure of transfer of debenture.Preview