Which is not a type of Debenture?

Which is not a type of Debenture?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Non-Transferable Debentures

Debentures are classified by security (secured, unsecured), tenure (redeemable, irredeemable), convertibility (convertible, non-convertible), coupon rate and registration (registered, bearer). A debenture is a marketable instrument: a registered debenture is transferred by a transfer deed and a bearer debenture by mere delivery, so every debenture is transferable and there is no class called non-transferable.

Option (1) Non-Convertible Debenture — A type of debenture. It cannot be converted into shares or other securities; most debentures are of this kind.

Option (2) Unsecured Debentures — A type of debenture. It carries no specific charge on the assets of the company.

Option (4) Irredeemable Debentures — A type of debenture. Also called perpetual debentures, they are repaid only on winding up or after a long period.

NCERT (2026-27 edition):
From the Point of view of Security – “… Unsecured Debentures: Unsecured debentures do not have a specific charge on the assets of the company.”

NCERT (2026-27 edition):
From the Point of view of Tenure – “… Irredeemable Debentures: Irredeemable debentures are also known as Perpetual Debentures because the company does not give any undertaking for the repayment of money borrowed by issuing such debentures.”

NCERT (2026-27 edition):
From the Point of view of Convertibility – “… Non-Convertible Debentures: The debentures which cannot be converted into shares or in any other securities are called non-convertible debentures.”

NCERT (2026-27 edition):
From the view Point of Registration – “Registered Debentures: Registered debentures are those debentures in respect of which all details including names, addresses and particulars of holding of the debentureholders are entered in a register kept by the company. Such debentures can be transferred only by executing a regular transfer deed.”