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What is Debenture? - Secretarial Practice

What is debenture?

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Solution

Meaning: - When a company wants to borrow long term finance then issuing debentures is the most convenient method. Because, debentures can be repaid after a long period such as 10 years, 20 years, etc. the term debenture originates from a Latin word ‘debare’ meaning ‘to owe’. In simple term a debenture is an instrument of credit issued by a company to acknowledge its debt/loan to debenture holder upto a certain sum of money under certain terms and conditions. It is in the form of document known as Debenture Certificate.

Definition: - "an instrument under seal evidencing debt, the essence of it being admission of indebtedness”.

Concept: Debentures and Bonds
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