A person having the debentures is called debenture holder whereas a person holding the shares is called shareholder. A shareholder subscribes to the shares of a company. … On the other hand, debenture-holders are the subscribers to debentures. Debentures are part of loan.
What is the role of debenture holder?
The debenture Trustee is a liaison between the issuer company and the debenture holders, for the purpose of securing the interest of the debenture-holders by holding the secured property on behalf of the issuer company that is mortgaged in favor of the debenture trustee.
What do you mean by debentures and who are debenture holders?
Debentures are instruments of debt, which means that debenture holders become creditors of the company. … This is because they are not instruments of equity, so debenture holders are not owners of the company, only creditors. The interest payable to these debenture holders is a charge against the profits of the company.
Is a debenture holder is an owner of the company?
(1) Debenture is a loan taken by company for medium to long period. Debenture holder therefore is the creditor of the company. … Hence Debenture holders are not the owners of the company.
Who can be debenture Trustee?
Who can be appointed a Debenture Trustee? To act as debenture trustee, the entity should either be a scheduled bank carrying on commercial activity, a public financial institution, an insurance company, or a body corporate. The entity should be registered with SEBI to act as a debenture trustee.
What is debenture Trust Deed answer in one sentence?
(1) The agreement created by the company, whereby trustees are appointed to protect the interest of debenture – holders before they are offered for public subscription is known as Debenture Trust Deed.
What is debenture simple words?
A debenture is a type of bond or other debt instrument that is unsecured by collateral. Since debentures have no collateral backing, they must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds.
Who is called debenture holder?
Jul 20, 2018. A person having the debentures is called debenture holder whereas a person holding the shares is called shareholder. A shareholder or member is the joint owner of a company, but a debenture holder is only a creditor of the company.
What is debenture example?
What is a Debenture? A debenture is a bond issued with no collateral. Instead, investors rely upon the general creditworthiness and reputation of the issuing entity to obtain a return of their investment plus interest income. … Examples of debentures are Treasury bonds and Treasury bills.
Do debentures pay dividends?
What is a Debenture? A debenture is a bond issued with no collateral. Instead, investors rely upon the general creditworthiness and reputation of the issuing entity to obtain a return of their investment plus interest income. … Examples of debentures are Treasury bonds and Treasury bills.
What is difference between share and debenture?
Share is the capital of the company, but Debenture is the debt of the company. The shares represent ownership of the shareholders in the company. On the other hand, debentures represent indebtedness of the company. The income earned on shares is the dividend, but the income earned on debentures is interest.
What is the status of debenture holder in company?
A debenture holder is considered as the creditor of the company.