Question

Briefly discuss any two features of the following sources of finance available to an organisation in India.

Debentures

Answer 1

The features of the debentures are as follows:

• Loan instrument/document issued under company’s seal/acknowledgement of debt.
• It is a long-term credit facility.
• There is a fixed rate of interest.
• There are no ownership rights.
• They may be secured or unsecured.
• There is a charge on assets, so they cannot be used as collateral.
• They may be redeemable or irredeemable.
• They are tradable.
• Priority in repayment.
• They do not carry voting rights.