What is debenture?, Different kinds of debentures.

 What is a debenture?

A debenture is a document given by a company under its phone seal as a proof or evidence of a debt by the holder normally arising out of a loan and most commonly secured by a charge.

In other words, issuing debentures is a way through which company accept money from general public and give the interest on that amount of money as security they give them the papers under the seal of the company which are known as the debenture certificates.

 kinds of debentures

Debentures may be of different kinds some of them are:-

Redeemable debentures:- redeemable debentures are those debentures which are redeemable after a certain period of time,  they cannot be transferred to another person by debenture holder.

Registered debentures:- registered debentures are those debentures which are registered with the company.

Bearer debentures:- bearer debentures are those debentures on which the interest is paid to the person who is holding the debenture at that time.

Secured debentures:- secured debentures are those debentures which are secured and give a guarantee to be paid.

Unsecured debentures:- Unsecured debentures are those debentures which are unsecured.

Convertible debentures:- convertible debentures are those debentures which are convertible into another security after a fixed period of time.

Naked debentures:- naked debentures carries no collateral, it means in case of bankruptcy the debt holder will be considered as a General creditor.

Note:-  Naked debentures are also called Unsecured debentures and vice versa.