The issue of Debenture can be said to be similar to that of shares. In either of the scenarios, the collection of the money will be either in a lump sum manner or will be according to any fixed installments. As per Debentures, the issuance of it can be wither through cash or for any other kind of valid consideration. Sometimes the issue also happens when there is any collateral security.
The issue for Cash in a normal course of time, most of the companies issue the debentures for some specific amount. This can occur at three different instances, one is if it is being issued at par, if it is issued at a discount or if it is issued at any premium.
In this scenario, the debentures will be issued at the face value. This means that the issue will occur at a nominal price and it will not be more than that amount or even less than that face value. The company will have the option to either take the amount in a lump sum manner or through a fixed installment.
If the debentures of the company are getting issued at a value that is less than the face value, then it is happening at a discount. In this scenario, if the face value was assumed to be 1000 rupees then the issue might have taken place say at 800 rupees. Such an issue can be said to be an issue at a discount. They are usually said to be considered to be a loss in the capital of the company.[1]
If the debentures of the company are getting issued at a value that is more than the face value, then it is happening at a premium. In this scenario, if the face value was assumed to be 1000 rupees then the issue might have taken place say at 1200 rupees. Such an issue can be said to be an issue at a premium. The additional amount that is been collected over the nominal value will be taken as a surplus for the company.
There are certain kinds of debentures that can be issued not in exchange for cash. This means that it is for some other consideration. It can occur in a scenario where the company might have taken or purchased something from the holder so in return that the company can issue some debentures of that equivalent amount.[2]
In certain scenarios, the company is also allowed to issue any debenture to a person who can in exchange for them provides any collateral security. The said security can be like against any kind of loan or borrowings that the company holds.
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.
