Question

What is the meaning of redemption of debentures out of capital?

Answer 1

Profit on redemption of debentures is a capital profit. It is used to write-off discount on issue of debentures/shares; otherwise it will be transferred to capital reserve. Debentures may be redeemed out of capital or out of profits.

Redemption of Debentures out of capital. ... In this case no transfer is made to DRR A/c when the debentures are redeeming out of capital. As per SEBI Guidelines, a company cannot redeem its debentures totally out of capital, so maximum of 50% of debentures can be redeem out of capital.