Question

what is the meaning of buying own debentures by the company in open market?

Answer 1

It is not necessary for a company to immediately cancel it's own purchased debentures . In fact , when a company has surplus funds, instead of investing these funds in the securities of other companies, it buys its own debentures as investment.

Answer 2

Redemption of debentures by purchase in open market is the condition when a company is authorised by its Article of Association to be able to purchase or buy its own debentures.

Explanation for the answer:

• Yes, a company can purchase its own debentures under the circumstance if it is authorised by its Article of Association.
• As per the Company Act, if a company is authorised by its articles of association, it can buy its own debentures in the open market.
• The debentures so purchased can be either used for immediate cancellation or for redemption of debentures or for investment.

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