TYPES OF DEBENTURES

Debentures can be classified into various kinds on the aspects of security, convertibility, permanence, negotiability, and priority. Some of them are as follows:

Redeemable and Irredeemable Debentures
In a scenario, where the issuance of debentures is done for a specific amount of time i.e. fixed period, and cannot be changed after the issuance then such a debenture is known to be a redeemable debenture. In this case, the company is required to pay back the amount after a specific time or upon notice to the holder. The company cannot refuse to pay the amount back to the holder as it was issued just for a precise period.

Registered and Bearer Debentures
If a debenture is being issued and the registration of them takes place with the name of the actual holder, then it is said to be a registered Debenture. In this scenario, the holder has his name in the certificate that is being provided by the Company and all the amount that has to be paid along with interest will only happen in the name that is being mentioned on the certificate.  These kinds of debentures are said to be transferable as the holder has its name on it and can be transferred to some other person. Here the name is said to be registered by the company that issues such a kind of debenture. The bearer is those debentures that will be only transferable via delivery. The coupons that will be attached to such debentures will allow them to collect the interest on the same.

 Secured and Unsecured Debentures
If a debenture that the company issues and are secured either through mortgaging any specific asset of the said company or through any other general asset, then it is known as a secured debenture. Here the mortgage of the assets acts as a security for the holder. They are sometimes also referred to as Floating or Mortgaged Debentures.

Convertible and Non-Convertible Debentures
When a holder of any specific debenture is given an opportunity that at the expiry of the period he can either wholly or a part of these holdings can convert them into equity shares of the company. Here the holder has the discretion as to either to convert the entire holdings or just a part of it into equity shares. If the conversion is done of only a specific part, then it is known as Partly Convertible Debentures and in case the entire holding is converted then it is known as Fully Convertible Debentures.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.