Debentures are documents which ordinarily creates or acknowledge debts. They are documents showings as evidence that Company X borrowed money from Company Y.


A debenture-holder is a company creditor; he is the one who borrowed the company such money.

Debenture-holders are generally not shareholders unless it is agreed that such debenture, upon redemption, be convertible into shares.


Companies all over the world, big or small borrow money for the purpose of its business or object; in doing this it may mortgage or charge it's undertaking, property and uncalled capital and issue debenture stock and other security outright. Or as security for any debt, liability or obligation of the company or of any third party

Types Of Debentures


1. Secured Debentures: [/b]This is a popular kind of debenture, they re secured by charge over the company's assets/ properties ands it may be so secured as a fixed charge or. By a floating charge over the whole or specified part of the company's assets or undertaking, or by both fixed charge on specific property and floating charge.

[b]
2.)  Perpetual Debenture: These are debentures that are not redeemable or only redeemable, if at all, after a long time; These debentures may also be redeemable after the occurrence of a particular event.

3.) Redeemable Debentures:   These sort of debentures, when entered into, are redeemable at any time.


4.) Convertible Debentures: These are debentures issued on the creditor, that when ripe for redemption or payment by the company, at the option of the company or the debenture holder, he may choose to convert it into shares of the company upon an agreed term of issue of the debenture i.e the debenture holder instead of redeeming his money may decide to convert it into shares of the company that he borrowed such money, so far there is n agreement to that effect.


5.) N aked Debenture: [/b]These are debentures that are not secured by any charge over them.



[b]Charges securing a   debenture


The popular means of creating Debenture is by charging the property of the company over it. Such debenture may be secured on the fixed assets or floating assets of the company. It is a fixed charge where the charge is secured on ...................Read More: Visit legalify.ng/blog