Which statements are wrong about debentures?
(A) Debenture is a part of owned capital.
(B) The debentures cannot be issued at a discount of more than 10% of the face value.
(C) Debentures cannot be converted into shares.
(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 2
The correct answer is Option (2) → (A), (B) and (C) only
A debenture is an acknowledgement of a debt taken by the company, so the questions to ask of each statement are what kind of capital it is, how it may be issued, and how it may be repaid.
(A) Debenture is a part of owned capital. Incorrect. A share is owned capital; a debenture is borrowed capital, a loan the company must repay.
(B) The debentures cannot be issued at a discount of more than 10% of the face value. Incorrect. Debentures may be issued at a discount, and no such 10% ceiling applies to them; the discount is written off as a loss on issue.
(C) Debentures cannot be converted into shares. Incorrect. Convertible debentures are converted into equity shares or other securities, fully or partly.
(D) 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.
NCERT (2026-27 edition):
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