A Debenture is a type of debt instrument issued to any person who loan money to a company for a particular term and interest rate. In common, debentures have the following significant features:
1) A Debenture holders are not the owners of the corporation. They are considered the creditors of the business or in other words, the company borrows money from them through issuing debenture.
2) No voting human rights. The debenture-holder is not a shareholder and can not vote in the company’s common meetings.
3) A Fixed rate of interest. A debenture with a fixed charge has a fixed interest rate. It can be submitted as “10% Debenture”. They are each and every one the time unsecured and make a fixed rate of interest but has no share of the profit.
4) Mandatory payment of interest Rate. The interest rate on debenture is payable irrespective of whether there are making profits or not.
5) Irredeemable and usable. A usable debenture is the one which is to be repaid within a maturity time, while Irredeemable or Non-redeemable debentures can not be redeemed in the lifetime of the company and simply repayable upon the liquidation of the business.
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