Terms Introduced in the Chapter

A written acknowledgement of a debt issued by a company, usually carrying a fixed rate of interest and a promise to repay the principal. It forms part of a company's loan (borrowed) capital, and its …

An instrument of debt similar to a debenture in content and texture. The main difference is that a bond may be issued without a pre-determined rate of interest, as in th …

A secured debenture that carries a charge on the company's assets as security for repayment. If the company defaults, the holders can realise their du …

A debenture that is not repayable during the lifetime of the company and is redeemed only at the time of winding up. It is also called a …

A debenture issued without a stated rate of interest. It is issued at a large discount to its face value, and that discount is the investor's return in …

A debenture issued with a stated fixed rate of interest (the coupon rate), which the company pays to the holders …

A debenture whose holder's name and holdings are recorded in the company's register of debenture holders. It can be transferred only through …

A debenture that is transferable by mere delivery. The company keeps no record of the holder, and interest is paid to whoever holds the …

An encumbrance created on the company's assets as security for its debentures, obliging the company to meet its debenture obligations from those assets. It may be a fixe …

A charge created against a specific, identifiable asset such as land or building, which the company cannot dispose of freely whi …

A charge on a class of the company's assets that keeps changing, such as stock-in-trade or debtors. It settles (crystallises) into a fixed charge on a specified event …

A charge that gives its holder priority in repayment; the first-charge holder realises the claim from the net value of the charged asset befor …

The date on which the debentures fall due for redemption and the company repays the principal amount to the …

The face (nominal) value of the debentures — the sum the company borrows and undertakes to repay to the hol …

The shortfall of the issue price below face value (discount on issue) together with any premium payable on redemption (loss on issue). It is a capital loss, written off o …

The amount payable by a company for assets or a business acquired from a vendor, which the company may discharge by issuing debentures …

The discharge of the liability on debentures by repaying the debenture holders, normally on the expiry of the term for which the …

A random method of selecting which specific debentures are to be redeemed when redemption is made in instalments, so that the selection …

A company's own debentures that it has purchased from the open market and holds temporarily in an Own Debentures Account before cance …

Redemption of debentures where the amounts repaid are not set aside out of divisible profits, so the company's capital is reduced to that extent (no adequate Debenture R …

Redemption of debentures where an amount is transferred from divisible profits to the Debenture Redemption Reserve, so that reserves — not capital — b …

Redemption in which debentures are discharged by converting them into equity shares, preference shares or new debentures, instead of by a cas …

A fund built up by setting aside a fixed sum out of profits each year and investing it, so that enough money is available to redeem the deb …

A secondary or additional security given to a lender over and above the primary security. Debentures issued as collateral are enforced only if the compan …

A charge that ranks after the first charge; its holder can realise the loan only from the surplus value of the asset that remains after the first …

A method of redemption in which a company buys back its own debentures from the open market and cancels them, often below face value, transferring the resulti …