DEBENTUR

A debentureES
is a document under the company's seal which
Provides for the payment of a principal sum and interest
thereon at regular intervals, which is usually secured by a
fixed or floating charge on the company's property or under
Taking and which acknowledges a loan to the company's

Debentures are generally freely transferable by the

debenture holder. Debenture holders have no voting rights
and the interest paid to them is a charge against profit in
the company's financial statements
 TYPES OF
DEBENTURES

SECURED DEBENTURES
UNSECURED DEBENTURES
CONVERTIBLE DEBENTURES
NON-CONVERTIBLE DEBENTURES
REDEEMABLE DEBENTURE
IRREDEEMABLE DEBENTURE
 ADVANTAGES OF
DEBENTURES
Debenture provide long-term fund to a
company.
The rate of interest payable on debentures is,
usually, lower than the rate of dividend paid on
shares.
Dept financing does not result into dilution of
control because debentureholders do not have
voting right.
 Contd….

A company can trade on equity by mixing

debentures it's capital structure and there by
increase it's earning per share.
Many companies prefer to issue of
debentures because of the fixed rate of
interest attached to them irrespective of the
changes in price levels.
 DISADVANTAGE OF
DEBENTURES

•Fixed obligation
•Reduction in credibility
•Charge on assets
• No voting rights
HARACTERISTICS OF DEBENTURE

BORROWED FUND
FIXED RATE OF INTEREST
Maturity
SECURITY
 Claims on income
 Claims on Assets
THANK
YOU