What are debentures in company law?

What are debentures in company law?

A debenture is a bond or promissory note that is issued by a business to a creditor in exchange for capital. The repayment and terms of the loan are completed based on the general creditworthiness of the business and not by a lien, mortgage, or any specific property. The term “debenture” includes: Stocks. Bonds.

What is debentures under Companies Act 2013?

Section 2(30) of the Companies Act, 2013 define “debenture” which includes debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not. Thus, Debenture is a written instrument acknowledging a debt to the Company.

What are company debentures?

In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The interest paid to them is a charge against profit in the company’s financial statements. The term “debenture” is more descriptive than definitive.

What is the difference between a bond and a debenture?

Bonds are essentially loans that are secured by a physical asset. Generally, the lender also receives a fixed rate of interest during the duration of the bond’s term. Debentures, on the other hand, are unsecured debt instruments that are not backed by any collateral.

What is debentures explain its types?

Debentures are a debt instrument used by companies and government to issue the loan. The loan is issued to corporates based on their reputation at a fixed rate of interest. Secured and Unsecured, Registered and Bearer, Convertible and Non-Convertible, First and Second are four types of Debentures.

What is debenture example?

What is a Debenture? A debenture is a bond issued with no collateral. Instead, investors rely upon the general creditworthiness and reputation of the issuing entity to obtain a return of their investment plus interest income. Examples of debentures are Treasury bonds and Treasury bills.

What are the classification of debentures?

There are various types of debentures like redeemable, irredeemable/perpetual, convertible, non-convertible, fully secured, partly secured, mortgage, unsecured, naked, first mortgaged, second mortgaged, the bearer, fixed, floating rate, coupon rate, zero-coupon, secured premium notes, callable, puttable, etc.

Is debenture movable property?

Debenture is a movable property. It is in the form of a certificate of indebtedness of the company and issued by the company itself. It generally creates a charge on the undertaking or undertakings of the company. The debenture holders cannot claim the privilege to vote in any meeting of the company.

What is a debenture in South Africa?

Debentures are a type of Debt Instrument, similar to a Bond, that companies issue in order to raise capital. Details of Debentures are documented in an indenture, which is a written agreement between the issuer and the holder. Companies pay investors interest for the term of the Debenture.

What is meant by debenture answer?

A debenture is an instrument used by a lender, such as a bank, when providing capital to companies and individuals. It enables the lender to secure loan repayments against the borrower’s assets – even if they default on the payment. A debenture can grant a fixed charge or a floating charge.

What are the stages of debentures?

(i) Issue of debentures; (ii) Creation of provision for their redemption; (iii) Redemption of debentures.

Is debenture an asset?

A debenture is a type of debt instrument that is not backed by any collateral and usually has a term greater than 10 years. Debentures are backed only by the creditworthiness and reputation of the issuer. Both corporations and governments frequently issue debentures to raise capital or funds.

What is debenture in company law?

In a corporate context, the Companies Act 2006 provides a broader interpretation of debenture and defines it as including ” debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not” (section 738).

How will the new debenture Act be replaced?

The Bill’s explanatory memorandum describes how the Act’s “archaic” debenture provisions will be replaced by a “general scheme designed to protect the interests of debenture holders without making unnecessary distinctions based on the artificial categorisations of the debt instruments they hold”.

How will South Africa’s upcoming corporate law amendments affect debentures?

South Africa’s upcoming corporate law amendments effect sweeping changes to the legislation governing corporate finance in general, including the nature of debentures in particular.

When did the companies (share capital and debentures) Act 2014 come into effect?

The Companies (Share Capital and Debentures) first Amendment Rules, 2014 dated 18 th June, .2014 The Companies (Share Capital and Debentures) Second Amendment Rules, 2015 dated 18 th March, 2015.