3 Marks Each

Question

Explain the types of debentures.

Vidyadip · Accepted Answer

Types of debentures/ classification of debentures are as follows:
$(A)$ On the basis of security:

$(B)$ As per Negotiability and Procedure for redemption:

$(C)$ As per conditions of Redemption:

$(D)$ On the basis of conditions of convertibility:

$(i)$ Convertible Debentures, debentures.
Secured or Mortgage Debentures:
When this type of debentures are issued some or all the assets of the company are given as security. First mortgage debentures are those that have a first claim on the assets charged. Second mortgage debentures are those that have a second claim on the assets charged.
$(ii)$ Unsecured debentures are issued without giving any security or creating any charge on the assets of the company.
$(iii)$ Registered debentures are recorded in the register of debenture holders maintain by company This register contains the name, address and other particulars related to the debenture holde Rs.
$(iv)$ Bearer Debentures: This type of debentures are purchased by the purchaser by making payment to the seller of the debenture. Interest on like these debentures can be collected through the prescribed bank.
$(v)$ Redeemable debentures are the debentures on which amount of debentures can be repaid after a certain period.
$(vi)$ Irredeemable debentures are those debentures which are not repayable by the company during its life time. Generally, these type of debentures are repayable only at the time of Liquidation of the company.
$(vii)$ Convertible debentures are those debentures which are converted into equity shares or other securities at a stated rate of exchange.

$(viii)$ Non-convertible debentures cannot be converted into shares or debentures or other securities.

$(i)$ Profit on sale of assets	$Rs. 15,000$
$(ii)$ Loss on sale of furniture	$Rs. 8,000$
$(iii)$ Income of rent	$Rs. 48,000$
$(iv)$ Interest paid on debenture	$Rs. 32,000$
$(v)$ Dividend payment	$Rs. 10,000$

Answer