Q.Study the following case/situation and express your opinion.
Violet Ltd. company plans to raise ₹ 10 crores by issuing debentures. The Board of Directors has some queries. Please advise them on the following:
Can they issue convertible debentures?
As the company is offering debentures to its members, can such debentures have normal voting rights?
Capital raised by issuing debentures will be Owned Capital or Borrowed Capital?

The correct option is borrowed. A debenture is a loan to the company, so debenture capital is borrowed capital.

When a company issues debentures, it acknowledges a debt and promises to repay the amount with interest after a fixed period. The debenture holder is therefore a creditor of the company, not an owner. Because the money is lent to the company and must be repaid, it is treated as borrowed capital.

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Debenture capital is Borrowed capital. A debenture represents a loan given to the company, so debenture-holders are creditors, not owners.

When a company issues debentures, it borrows money from the public and promises to pay a fixed rate of interest and to repay the principal on maturity. Debenture-holders therefore do not get ownership rights (no voting rights) — they are lenders to the company. The money so raised is a liability the company must repay, which makes it borrowed (loan) capital.

Why the other options are wrong: …