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Question
What is meant by redemption of debentures?
What is meant by redemption of debentures?
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Solution
It refers to the repayment of debentures by the company to the debenture holders. In this process debenture holders get payment for the debentures they were issued and the repayment is made as per terms and conditions determined at the time of debenture issue. It may be redeemable at par, discount or premium. Redemption takes place from profits or from a fresh batch of debentures. Following methods are used in redeeming debentures:
Redemption of debentures may be done by the followin g methods
(i) By paying after stipulated period
(ii) By annual drawing
(iii) By conversion into shares or new debentures
(iv) By purchasing own debentures in the open market
(v) At the option of the company
It refers to the repayment of debentures by the company to the debenture holders. In this process debenture holders get payment for the debentures they were issued and the repayment is made as per terms and conditions determined at the time of debenture issue. It may be redeemable at par, discount or premium. Redemption takes place from profits or from a fresh batch of debentures. Following methods are used in redeeming debentures:
Redemption of debentures may be done by the followin g methods
(i) By paying after stipulated period
(ii) By annual drawing
(iii) By conversion into shares or new debentures
(iv) By purchasing own debentures in the open market
(v) At the option of the company
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