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Question
What is Debentures?
Solution
When a company needs funds for extension and development purposes without increasing its share capital, it can borrow from the general public by issuing certificates for a fixed period of time and at a fixed rate of interest. Such a loan certificate is called a debenture.
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| Sunflower limited company proposes to issue debentures to the public to raise funds. After discussions, the Board of directors has decided to issue secured, redeemable, non-convertible debentures with o tenure of ten years. Please advise the Board on the following matters: |
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| Violet Ltd. company plans to raise ₹ 10 crores by issuing debentures. The Board of Directors has some queries. Please advise them on the following: |
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- Capital raised by issuing debentures will be Owned Capital or Borrowed Capital?
