Select the pair which is true about debentures-
(A) Debenture is a part of owned capital.
(B) The payment of interest on debentures is a charge on the profits of the company.
(C) The debentures cannot be issued at a discount of more than 10% of the face value.
(D) Redeemable debentures are those debentures, which are payable on the expiry of the specific period.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (B) and (D) only
A debenture is a loan to the company, not a share in its ownership; that one fact decides most of these statements.
(A) Debenture is a part of owned capital. Incorrect. A debenture is part of borrowed (loan) capital; owned capital is the share capital.
(B) The payment of interest on debentures is a charge on the profits of the company. Correct. Interest on debentures must be paid whether or not the company earns a profit, so it is a charge against profit, not an appropriation of it like dividend.
(C) The debentures cannot be issued at a discount of more than 10% of the face value. Incorrect. The Act sets no such 10% ceiling on the discount at which debentures may be issued.
(D) Redeemable debentures are those debentures, which are payable on the expiry of the specific period. Correct. That is the meaning of redeemable: repaid after a fixed period, in a lump sum or in instalments.
NCERT (2026-27 edition):
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