Debentures

The debentures are both redeemable and unredeemable, freely transferable with a fixed interest rate. It is unsecured and sustained only by the issuer's credibility. Unlike shareholders, the debenture holders who are the creditor of the company do not hold any voting rights. Debenture holders are paid Yearly/ Half yearly fixed rate of interest irrespective of market volatility. 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 legal term "debenture" originally referred to a document that either creates a debt or acknowledges it, but in some countries the term is now used interchangeably with bond, loan stock or note. A debenture is thus like a certificate of loan or a loan bond evidencing the company's liability to pay a specified amount with interest. Although the money raised by the debentures becomes a part of the company's capital structure, it does not become share capital. Senior debentures get paid before subordinated debentures, and there are varying rates of risk and payoff for these categories.

Debentures are freely transferable by the debenture holder. Debenture holders have no rights to vote in the company's general meetings of shareholders, but they may have separate meetings or votes e.g. on changes to the rights attached to the debentures. The interest paid to them is a charge against profit in the company's financial statements

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