Question

The debentures are known as creditors of the company. (State True or False)

Answer 1

the statement is true

Answer 2

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.