Q.Choose the correct option and justify: A debenture-holder of a company is its ________.
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Start your 14-day free trial to unlock the full solution →The correct option is (b) Creditor.
A debenture, as defined under Section 2(30) of the Companies Act, 2013, is a certificate acknowledging that the company has borrowed a stated sum of money from the person holding it, on a promise of fixed interest and eventual repayment. Lending money to an entity, rather than contributing capital to become its part-owner, is exactly what makes the lender a creditor of that entity — and that is precisely the debenture-holder's position with respect to the company.
Option (a), Owner, is incorrect: ownership of a company belongs to its shareholders (members), not to its debenture-holders — and the clearest statutory proof of this is Section 71(2) of the Companies Act, 2013, which bars any debenture from carrying voting rights at all; an owner of a company votes at its general meetings, while a debenture-holder cannot. Option (c), Customer, is incorrect: a customer buys goods or services from the company, an entirely unrelated commercial relationship with no debt or ownership dimension at all. Option (d), Employee, is incorrect: an employee renders service to the company in exchange for a salary or wage under a contract of employment, again a wholly different relationship from lending the company money against a debenture. …
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