Question 33 of 35
Q.Discuss the different types of debentures.
Maharashtra MsbshseMaharashtra HSC (MSBSHSE) Board 2026Subjective· 4mImportance★★★★★
94% · 33/35 Questions
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Start your 14-day free trial to unlock the full solution →Debentures are classified by security (secured/unsecured), convertibility (convertible/non-convertible), permanence (redeemable/irredeemable), records (registered/bearer) and priority (first/second).
Debentures can be of different types depending on the basis of classification. The main types are explained below.
- On the basis of security:
- Secured (mortgage) debentures — secured by a charge on the assets of the company; if the company defaults, the holders can recover their money from those assets.
- Unsecured (naked) debentures — not secured by any charge on assets; holders are treated as ordinary creditors.
- On the basis of convertibility:
- Convertible debentures — can be converted into equity shares after a specified period, either fully or partly.
- Non-convertible debentures — cannot be converted into shares and are simply repaid on maturity.
- On the basis of tenure (permanence):
- Redeemable debentures — repaid by the company after a fixed period.
- Irredeemable (perpetual) debentures — not repaid during the lifetime of the company; repaid only on winding up or default.
- On the basis of records:
- Registered debentures — the holder's name is recorded in the company's register; transfer requires a proper transfer deed.
- Bearer debentures — transferable by mere delivery; interest is paid to whoever holds the coupon. …
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