Debenture Make Modifiable For Free

According to section 71 of the Companies Act, 2013, a company may issue debentures with an option to convert debentures into shares either wholly or partly at the time of redemption. originally issued at a discount can be converted into shares on the basis of the nominal value of the debentures.

Debentures generally have a more specific purpose than other bonds. While both are used to raise capital, debentures typically are issued to raise capital to meet the expenses of an upcoming project or to pay for a planned expansion in business.

A debenture is an instrument used by a lender, such as a bank, when providing capital to companies and individuals. It enables the lender to secure loan repayments against the borrower's assets even if they default on the payment. A debenture can grant a fixed charge or a floating charge.

A debenture is converted into equity shares. A notice of the conversion is sent, and the debenture holders are asked to return debenture certificates. Secretary carries out the process of allotment of the shares. After allotment, changes have to be made in the Register of charges.

Advantages of Debentures Investors who want fixed income at lesser risk prefer them.Financing through them is less costly as compared to the cost of preference or equity capital as the interest payment on debentures is tax deductible. The company does not involve its profits in a debenture.

Debentures. Debentures generally have a more specific purpose than other bonds. While both are used to raise capital, debentures typically are issued to raise capital to meet the expenses of an upcoming project or to pay for a planned expansion in business.

Put simply, a debenture is the document that grants lenders a charge over a borrower's assets, giving them a means of collecting debt if the borrower defaults. Debentures are commonly used by traditional lenders, such as banks, when providing high-value funding to larger companies.