Question

Attempt the following
State the position of debenture holders in a company.

Answer 1

Debenture is a document issued by a company as an evidence of debt to its holder, usually arising out of loan and mostly secured by charge on assets of issuing company. A person who purchases debenture of a company is called a debentureholder. Debentureholders are not the owners like shareholders but are creditors of the company. Fund contributed by debentureholders to company is borrowed funds to company received against assets. Debentureholders get fixed rate of interest irrespective of loss or profit to the company as it is compulsory to be paid as per law. They do not enjoy voting rights in the management of the company. Debenture holders being creditors of the company have to be repayed after a specified time period on its maturity.