1.

State and explain the types of debentures.

Answer»

Types of debentures:
1. Secured debentures:

Debentures that are secured against company’s assets are called secured debentures. This means that at the time of dissolution if the company does not . have sufficient funds to repay the debentures than it will sell the mortgaged assets to repay. These assets carry floating charge when mortgaged.

2. Convertible debentures:

  • If a company has announced that after a specific time debentures will be converted fully or partly into equity shares then such debentures are known as convertible debentures.
  • If the company has made a provision of converting debentures in its Memorandum of Association then the company would give equity shares against the debentures in a pre-decide ratio.

3. Non-convertible debentures:

Debentures that are not converted into shares and whose money is returned to the debenture holders as per specific conditions and time frame are called non-convertible debentures.


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