The classification of debenture
Debenture is a written document bearing the seal of the company and which acknowledges a debt. When company requires short term capital, it may get such by issue of debenture. There are various types of debentures:
On the basis of security: From security point of view, debentures are of two types called simple or naked debenture and secured or mortgaged debentures. The former type of debentures are issued without any mortgage while the later are issued against security.
Image Source: vrmintel.com/demosite/wp-content/uploads/2012/12/Secure-IT-Systems-for-VRMs.jpg
ADVERTISEMENTS:
On the basis of transfer: From transfer point of view, debentures are of two types called bearer debenture and registered debentures. The former are of two types called bearer debenture and registered debentures. The former denotes a type of debenture whose details are not recorded in the books of the company while in the later case, the particulars of debentures are recorded in the company while in the later case, the particulars of debentures are recorded in the books of accounts and therefore the transfer of debenture becomes difficult.
On the basis of payment: Form payment point of view, there are two types of debentures called redeemable debenture and irredeemable debenture. The former debentures are paid over a definite period of time while the laters are not paid over a stipulated period and as such are called perpetual debentures.