The debentures are known as creditors of the company. (State True or False)
Answers
the statement is true
Answer: True
Explanation:
The debentures are known as creditors of the company.
Debentures are issued by companies as medium to long term instrument debt to borrow money with a contract to repay the borrowed money on the maturity . These debentures carry a fixed rate of interest for a fixed period. The rate of interest is payable either half yearly or yearly.
Debentures works as a loan certificate and is the most desirable way of borrowing money by the company. A Debenture holders does not possess any voting rights during the general meeting of shareholders of the company.
A company can issue different forms of debenture based on tenure, security, convertibility etc. The following are some of the different forms of debentures:
- Secured Debentures
- Unsecured Debentures
- Redeemable Debentures
- Irredeemable Debentures
- Fully Convertible Debentures
- Partly Convertible Debentures
- Non-Convertible Debentures
Hope this helps.