Features of Debentures

Debenture is a type of debt instrument issued to anyone who lend money to a company for a specified term and interest rate. In general, debentures have the following important features:

1) Debenture holders are not the owners of the company. They are considered the creditors of the corporation or in other words, the company borrow money from them through issuing debenture.

2) No voting rights. The debenture-holder is not a shareholder and cannot vote in the company's general meetings.

3) Fixed rate of interest. A debenture with a fixed charge has a fixed rate of interest. It can be presented as "10% Debenture". They are always unsecured and earns a fixed rate of interest but has no share of the profit.

4) Compulsory payment of interest. The interest on debenture is payable irrespective of whether there are profits made or not.

5) Redeemable and Irredeemable. A redeemable debenture is the one which is to be repaid within a maturity period, while Irredeemable or Non-redeemable debentures cannot be redeemed in the life time of the company and only repayable upon the liquidation of the corporation.

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Kelvin Wong Loke Yuen is an experienced writer with a strong background in finance, specializing in the creation of informative and engaging content on topics such as investment strategies, financial ratio analysis, and more. With years of experience in both financial writing and education, Kelvin is adept at translating complex financial concepts into clear, accessible language for a wide range of audiences. Follow him on: LinkedIn.

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