The correct answer is option 3- ABCEF.
D) Shareful debentures and G) Dividend debentures are not any type of debenture.
A company has the option to issue various types of debentures, which can be categorized as follows:
Based on security
- a) Secured Debentures: Secured debentures are those where the company pledges its assets as collateral to ensure repayment in case of default. This collateral can either be fixed or floating. A fixed charge is placed on specific assets, while a floating charge encompasses the company's general assets. Fixed charges are typically placed on assets used for operations and not intended for sale, while floating charges cover all assets except those assigned to secured creditors.
- (b) Unsecured Debentures: Unsecured debentures do not have a specific claim on the company's assets. However, in the event of default, a floating charge may be created on these debentures. Generally, companies do not issue these types of debentures.
Based on Tenure:
- (a) Redeemable Debentures: Redeemable debentures are repayable either in a lump sum or in installments at the end of a specified period or during the company's lifetime. These debentures can be redeemed at par value or at a premium.
- (b) Irredeemable Debentures: Irredeemable debentures, also known as Perpetual Debentures, are not subject to repayment within a specific timeframe. Instead, they are repaid upon the company's winding-up or after an extended period.
Based on Convertibility:
- (a) Convertible Debentures: Convertible debentures can be converted into equity shares or other securities, either at the discretion of the company or the debenture holders. These debentures can be fully or partially convertible.
- (b) Non-Convertible Debentures: Non-convertible debentures cannot be converted into shares or any other securities. Most debentures issued by companies fall into this category.
Based on Coupon Rate:
- (a) Specific Coupon Rate Debentures: These debentures are issued with a predetermined interest rate, known as the coupon rate. This rate can be fixed or floating, with floating rates often tied to the bank rate.
- (b) Zero Coupon Rate Debentures: Zero coupon rate debentures do not carry a specific interest rate. To compensate investors, these debentures are issued at a substantial discount, with the difference between the nominal value and the issue price representing the interest for the debenture's duration.
Based on Registration:
- (a) Registered Debentures: Registered debentures have detailed information about debenture holders, including their names, addresses, and holdings, recorded in a company-maintained register. These debentures can only be transferred through a formal transfer deed.
- (b) Bearer Debentures: Bearer debentures can be transferred simply by delivery, and the company does not maintain any records of the debenture holders. Interest payments on bearer debentures are made to whoever presents the attached interest coupon.
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