Accountancy Part AIssue and Redemption of Debentures

Debenture holders are:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → creditors of the company

A debenture is an acknowledgement of a loan taken by the company. Its holders have lent money to the company, receive a fixed interest and are repaid at maturity, so they are creditors, not owners.

NCERT (2026-27 edition):
Distinction between Shares and Debentures – “Ownership: A ‘share’ represents ownership of the company whereas a debenture is only acknowledgement of Debt. A share is a part of the owned capital whereas a debenture is a part of borrowed capital.”