The following are the features of Debentures:

(A) The payment of interest is a charge on profits and is to be paid even if there is no profit.

(B) The debentures, which are issued for a specified period are repayable on the expiry of that period.

(C) If the debentures are generally secured, they carry a fixed or floating charge over the assets of the company.

(D) Debentures can not be converted into shares in any case.

Choose the correct answer from the options given below:

(A), (B) and (C) only

The correct answer is option 2- (A), (B) and (C) only.

(A) The payment of interest is a charge on profits and is to be paid even if there is no profit. IT IS TRUE.
The payment of dividend is an appropriation of profits, whereas the payment of interest is a charge on profits and is to be paid even if there is no profit.

(B) The debentures, which are issued for a specified period are repayable on the expiry of that period. IT IS TRUE. 
Redeemable debentures are those which are payable on the expiry of the specific period either in lump sum or in instalments during the life time of the company. Debentures can be redeemed either at par or at premium.

(C) If the debentures are generally secured, they carry a fixed or floating charge over the assets of the company. IT IS TRUE. 
Secured debentures refer to those debentures where a charge is created on the assets of the company for the purpose of payment in case of default. The charge may be fixed or floating. A fixed charge is created on a specific asset whereas a floating charge is  on the general assets of the company. The fixed charge is created against those assets which are held by a company for use in operations not meant for sale whereas floating charge involves all assets excluding those assigned to the secured creditors.

(D) Debentures can not be converted into shares in any case. IT IS NOT TRUE. 
Shares cannot be converted into debentures whereas debentures can be converted into shares if the terms of issue so provide, and in that case these are known as convertible debentures.