What are debentures?

The most popular form of borrowing by the company is by way of issuing debentures. Debenture is said to refer to a document which either creates a debt or acknowledges it. It also provides a payment of interest at a fixed rate at stated intervals. It also contains an undertaking to repay the debt or at its option. It is usually under the common seal of the company. The debentures must be serially numbered and duly signed by the directors as per the regulations contained in the articles. It should also bear the date of issue and the date of redemption.