Which of the following are the correct statements regarding debentures/debentures interest?
(A) The payment of interest on debentures is a charge on the profits of the company.
(B) Redeemable debentures are those debentures which are payable on the expiry of the specific period.
(C) Debentures cannot be converted into shares.
(D) Perpetual debentures are also known as irredeemable debentures.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (D) only
A debenture is borrowed money, so its interest and its repayment terms decide each statement.
(A) The payment of interest on debentures is a charge on the profits of the company. Correct. Interest is payable to debentureholders whether or not the company earns a profit, so it is a charge, not an appropriation like dividend.
(B) Redeemable debentures are those debentures which are payable on the expiry of the specific period. Correct. They are repaid at the end of a fixed period, in a lump sum or in instalments.
(C) Debentures cannot be converted into shares. Incorrect. Convertible debentures can be converted into equity shares or other securities, fully or partly.
(D) Perpetual debentures are also known as irredeemable debentures. Correct. Debentures with no fixed date of repayment carry both names.
NCERT (2026-27 edition):
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