Meaning: Debenture means a document which acknowledges the loan made to the company and providing for the payment of interest on the sum borrowed, until the debenture is redeemed, that is repayment of the principal sum.


Definition: section 2(12) of the companies Act defines it as “Debenture includes debenture stock, bonds and may other securities of a company whether constituting a charge on the company’s assets or not.

The definition given above does not explain the term clearly. So, the correct definition of debenture is give n by Gower L.C.B. according to him “debenture is a name applied to a certain types of documents evidencing an indebtness which is normally but not necessarily secured by a charge over property.”

Thus, a debenture is a document which is drawn under the seal of the company, it binds the company to pay a sum money at a fixed time with the interest.

Characteristics of debentures:

  1. Debenture is a movable property.
  2. It is issued by the company.
  3. It is in the form of certificate certifying indebtness.
  4. It usually satisfies the date of redemption.
  5.  It generally creates a charge on the undertaking of the company.
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