Define Debenture and it's various types?




Debentures and its kinds

The words "Debenture" has not correct definition in Law. Some of the Philosophy's has define the term debenture is a document which the company give in the form of a debt to the holder. It is likewise a one sort of security which the organization gives the type of declaration. Thus debenture is a certificate of loan which the company issue to the lenders in the form of certificate.
Section 2(30) of the Companies Act, 2013 debenture means debenture stock, bond or any other securities of a company whether constituting a charge on the assets of the company or not.
In Levy v. Abercorries State and Co 1887 Justice Chitty characterize the term debenture: An archive which either creates a debt or acknowledges it, and any document which fulfills either of these condition is a debenture.
Topham has characterize debenture in his book on Company Law debenture implies debenture is a report given by an organization as a proof of an obligation to the holder for the most part emerging out of a credit and most generally verified by a charge. Section 2(30) of the 2013 Act, define the term as “debenture includes debenture stocks, bond any other securities of a company whether constituting a charge on the assets of the company or not.

Characteristics/features of a Debenture: The following are the essentials characteristics/features of a debenture are as follows:
a)      The Company issue a certificate issued called debentures. It is a instrument in writing.
b)      Debenture is used in an acknowledgement of indebtedness.
c)      Debenture is issued under the company seal.
d)     Each and every debenture is in numbered.
e)       Section 71 says that in every meeting debenture carry no voting right.

KINDS OF DEBENTURES

There are various kinds of debenture which can be classified as follows:-
1)      Negotiability Debenture
2)      Security Debenture
3)      Permanence Debenture
4)      Convertibility Debenture
5)      Priority Debenture

1)      Negotiability Debenture:-under transferability, the debenture can be grouped into two kinds, they are conveyor debenture and enlisted debenture.
                               I.            Bearer Debenture:-Unregistered Debenture are also known as Barer Debenture. These debenture are payable to bearer so they are called bearer debenture. The debenture which can be transferred by more delivery and a bona-fide transferee for the value is not affected by the defect in the title of the prior holder that’s why it is regarded as negotiability instrument.
                            II.            Registered Debenture:-Registered Debenture is only payable through registered holder that's it is called 'Registered Debenture".  In Registered debenture a holder name is appear both on the debenture certificate and in the company’s register of debenture. The register holder of the debenture can move the debenture in open market however it ought to be noticed that transferee ought to be finished needs to enroll organization.
2)      Security Debenture:-Under these debenture the security debenture can be divided into two types unsecured debenture and secured debenture.
                               I.            Unsecured Debenture:-The words Unsecured means simple ‘simple or naked’. Unsecured debenture is simple or naked so it is called unsure debenture. In these debenture the debenture holder is an ordinary unsecured creditor of the company for the recovery of debt.
                            II.            Secured Debenture:-In these debenture the company insured a assets with a charge and the charge is fixed these types of debenture are called secured/mortgage debenture.
3)      Permanence Debenture:-Permanence Debenture can be classified in two types they are redeemable debenture and irredeemable or perpetual debenture.
a)      Redeemable Debenture:-The primary highlights of these debenture is the debenture holder can re-issued After the expiry of the term of the advance the organization has ideal to pay back to the debenture holder.
4)      Convertibility Debenture:-The convertibility debenture can be classified into two groups convertible debenture and non convertible debenture.
1)      Convertible Debenture:-Under these debenture the debenture holder have ideal to change over the debenture into inclination or normal offer as expressed at dates of trade after a specific time are called convertibility debenture.
2)      Non convertible Debenture:-Under these debenture the debenture holder don't have ideal to change over into inclination of value shares.
5)      Priority Debenture:-Priority debenture the debenture can be classified into two types they are first debenture and second debenture.
1.      First Debenture:-The first debenture which are repaid in priority to the debenture are called first debenture.
2.      Second Debenture:-The second debenture is paid after the first debenture is paid.



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