Question

State True/False with reasons:
debenture capital is a borrowed capital or Debenture is a Loan Capital of the company.

• A. True
• B. False

Answer 1

The correct option is A True

(i) The term "debenture" is derived from of the Latin word "debere" which means to owe.
(ii) The issuing company owes money to the debenture holder as the debenture holder has lent money to the company.
(iii) Debenture acts as an acknowledgement of the loan taken by the company.
(iv) Debenture certificate is a document of indebtedness issued by a company under its common seal.
(v) Debentures represent borrowed/loan capital of a company.
(vi) Loan capital is that capital on which interest is paid compulsorily.
(vii) This interest does not depend on the profits of the company.