Question

What are the various kinds of Debentures?

Describe any four kinds of debentures.

Answer 1

1. On the basis of convertibility:
   • Non-Convertible Debentures: These instruments cannot be converted into equity shares.
   • Partly Convertible Debentures: Apart from these instruments are converted into equity shares.
   • Fully Convertible Debentures: These are fully convertible into equity shares.
   • Optionally Convertible Debentures: The investor can have the option to either convert the debentures at a price decided by the issuer or agreed upon at the time of issue.
2. On the basis of Security:
   • Secured Debentures: These instruments are secured by a charge on the fixed assets of the issuer company.
   • Unsecured Debentures: These instruments are unsecured against the assets.
3. On the basis of Redeemability:
   • Redeemable Debentures: It refers to the debentures which will be redeemed in the future.
   • Irredeemable Debentures: It is a debenture, in which no specific time is specified by the companies to pay back the money.
4. On the basis of Registration:
   • Registered Debentures: These are issued in the name of a particular person, who is registered by the company.
   • Bearer Debentures: These are issued to the bearer and are negotiable instruments, and are transferred by mere delivery.