As indicated by Sec. 2(12), 'debenture' incorporates debenture stock, securities and some other protections of an organization, regardless of whether establishing a charge on the resources of the organization or not. In this article, you can get your answers to the questions like what are debentures in accounting, their classes and all.
Trademark highlights of a debenture:
Debentures is given by an organization and is for the most part as a testament which is an affirmation of obligation.
It is given under the organization's seal.
It is one of an arrangement gave to various loan specialists.
It as a rule indicates a specific period or date as the date of reimbursement.
It by and large makes a charge on the endeavor of the organization or a few pieces of its property.
A debenture-holder doesn't reserve any option to cast a ballot in the organization gatherings.
Classes Of Debentures
Debentures might be ordered by the accompanying attributes, viz.,
1. Order dependent on debatability:
(1) Bearer debentures and (2) Registered debentures.
2. Order dependent on security:
(1) Secured debentures and (2) Unsecured or stripped debentures.
3. Order dependent on perpetual quality:
(1) Redeemable debentures and (2) Irredeemable or never-ending debentures
4. Order dependent on convertibility:
(1) Convertible debentures and (2) Non-convertible debentures.
5. Order dependent on need:
(1) First debentures and (2) Second debentures.
Debentures with casting a ballot rights not to be given (Sec. 117): An organization can't give any debentures conveying casting a ballot rights.
Issue of debentures at a markdown: Debentures can be given at a rebate, except if the Articles give in any case.
Debentures and debenture stock: The contrast among debentures and debenture stock is equivalent to the distinction among offers and stock.
Debenture trust deed: [New Sec. 117-An as embedded by the Companies (Amendment) Act, 2000], A trust deed for getting any issue of debentures will be in indicated structure and will be executed inside the endorsed period.
Arrangement of debenture trustees and obligations of debenture trustees [Sec. 117-B]: An individual will not be designated as a debenture trustee, on the off chance that he – (a)Beneficially holds partakes in the organization (b) is valuably qualified for funds which are to be paid by the organization to the debenture trustee (c) has gone into any assurance in regard of head obligations got by the debentures or interest subsequently.
Obligation of organization to make security and debenture reclamation save [New Sec. 117-C as embedded by the Companies (Amendment) Act, 2000]: Creation of debenture reclamation save: Where an organization issues debentures after the beginning of this Act, it will make a debenture recovery save for the reclamation of such debentures, to which sufficient sums will be credited, from out of its benefits each year until such debentures are reclaimed.
Responsibility of trustees for debenture-holders (Sec.119): A trustee is at risk for any break of trust where he neglects to show the level of care and perseverance expected of him as trustee, having respect to the arrangements of the trust deed giving on him any forces, specialists or discretions.