BORROWINGS-

DEBENTURES
What you should know?
 Borrowing Powers.
 Meaning of Debenture and types of
Debentures
 Debenture Trust Deed
 Redemption of Debentures and Remedies of
Debenture Holders
 Charges – fixed and floating charge
 Registration of charge
Characteristic features of a debenture -
1. It is issued by the company and is the form of a
certificate of indebtedness.
2. It usually specifies the date of redemption. It also
provides for the re-payment of principal and interest
at specified date or dates.
3. It generally creates a charge on the undertaking
or undertakings of the company.

Usually the words ‘ pari passu ‘ appear in the terms

and conditions of debentures. This means that all the
debentures of a particular class will receive the
money proportionately in case the company is unable
to discharge the whole obligation.
Borrowing Powers

Every trading company has an implied

power to borrow. A non- trading
company must, in its Memorandum or
Articles, contain an express power to
borrow; it cannot be implied.
Debentures
Debenture means” an
instrument in writing issued by a company

• under its common seal,

• acknowledging its indebtedness for a
certain sum of money and
• undertaking to repay it on or after a fixed
future date.”
Characteristics features of deb.
• It is issued by the company and is the form of a
certificate of indebtedness.
• It usually specifies the date of redemption. It also
provides for the re-payment of principal and interest at
specified dates.dates.
• It generally creates a charge on the or undertakings of
the company.
• Usually the words ‘ pari passu ‘ appear in the terms and
conditions of debentures. This means that all the
debentures of a particular class will receive the money
proportionately in case the company is unable to
discharge the whole obligation.
Types of Debentures

1 Registered debentures.
2. Bearer Debentures.
3. Simple and Naked Debentures .
4. Mortgage Debentures.
5. Redeemable Debentures.
6. Irredeemable Debentures.
Debentures (CONT)

7. Convertible Debentures.
(a) Fully Convertible Debentures
(b) Partly Convertible Debentures
8. Zero interest Debentures
9 Indexed Bonds/ Debentures