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Question
| Violet Ltd. company plans to raise ₹ 10 crores by issuing debentures. The Board of Directors has some queries. Please advise them on the following: |
- Can they issue convertible debentures?
- As the company is offering debentures to its members, can such debentures have normal voting rights?
- Capital raised by issuing debentures will be Owned Capital or Borrowed Capital?
Solution
- Yes, they can issue convertible debentures.
- No, debentures do not have normal voting rights. Voting rights are typically associated with equity shares, not debt instruments like debentures.
- Capital raised by issuing debentures will be Borrowed Capital. This is because debentures represent a loan from the debenture holders to the company and must be repaid.
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