Q.Distinguish between registered and bearer debentures.

This classification turns on how the debenture is transferred and to whom the company must pay interest and principal.

The registered/bearer classification of debentures concerns how ownership is recorded and how the debenture is transferred from one holder to another, and it mirrors a very similar distinction that also exists for shares.

A registered debenture is one whose holder's name is entered in the company's register of debenture-holders, which the company is required to maintain under Section 88 of the Companies Act, 2013. Because ownership is formally recorded against a name, transferring a registered debenture requires the execution of a proper instrument of transfer, which the company (or its registrar and transfer agent) must process before the transferee's name replaces the transferor's in the register. Interest and, eventually, the redemption amount are paid to the person whose name currently stands recorded in the register as at the relevant date — this gives both the company and the holder a clear, documented trail of who is entitled to payment at any point in time.

A bearer debenture, by contrast, carries no such register entry at all — it is transferable simply by delivering the physical certificate from one person to another, exactly like currency or a bearer cheque, with no instrument of transfer and no notice to the company required. Whoever physically holds the certificate is treated as entitled to receive the interest coupons and, ultimately, the redemption amount, without needing to prove any registered title. This makes a bearer debenture easier to transfer quickly but also riskier to hold, since a lost or stolen certificate can be presented for payment by whoever possesses it. …