MEANING:
A debenture is one of the capital market instruments which is used to raise medium or long term funds from public. A debenture is essentially a debt instrument that acknowledges a loan to the company and is executed under the common seal of the company. The debenture document, called Debenture deed contains provisions as to payment, of interest and the repayment of principal amount and giving a charge on the assets of a such a company, which may give security for the payment over the some or all the assets of the company. Issue of Debentures is one of the most common methods of raising the funds available to the company. It is an important source of finance.
FEATURES OF DEBENTURES:
following are:
A debenture is one of the capital market instruments which is used to raise medium or long term funds from public. A debenture is essentially a debt instrument that acknowledges a loan to the company and is executed under the common seal of the company. The debenture document, called Debenture deed contains provisions as to payment, of interest and the repayment of principal amount and giving a charge on the assets of a such a company, which may give security for the payment over the some or all the assets of the company. Issue of Debentures is one of the most common methods of raising the funds available to the company. It is an important source of finance.
FEATURES OF DEBENTURES:
following are:
- It is a document with evidence a loan made to a company.
- It is a fixed interest-bearing security where interest falls due on specific dates.
- Interest is payable at a predetermined fixed rate, regardless of the level of profit.
- The original sum is repaid at a specified future date or it is converted into shares or other debentures.
- It may or may not create a charge on the assets of a company as security.
- It can generally be bought or sold through the stock exchange at a price above or below its face value.
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