All About Debentures, An Appraisal

1. Introduction:

Debenture includes debenture stock, bonds and any other securities of a company whether constituting a charge on the assets of a company or not as defined in section 2(12) of the Companies Act, 1956 ("the Act"). This is an inclusive definition and amounts to borrowing of monies from the holders of debentures on such terms and conditions subject to which the debentures have been issued. Basically the debenture is represented by a document or certificate signed by the authorized officers of a company acknowledging money lent and guaranteeing repayment with interest and with or without security on the assets of the company for due performance of its obligation. This is a debt instrument and is the commonest method of raising loan capital at a lower cost, as part of project financing or for any other purposes.