Question

Debentures on which a company does not give any undertaking for the repayment of money borrowed are called:

• A. Bearer Debentures
• B. Secured Debentures
• C. Perpetual Debentures
• D. Registered Debentures

Hint:

Perpetual or Irredeemable Debentures are unique because the company doesn't promise to repay the principal amount at a specific future date during its operational life. Repayment usually happens only upon liquidation or breach of certain conditions.

Answer 1

The Correct Option is C

Let's analyze the types: \begin{itemize} \item[(A)] Bearer Debentures: Payable to the bearer, transferable by mere delivery. Repayment terms exist. \item[(B)] Secured Debentures: Repayment is secured by a charge on the company's assets. Repayment terms exist. \item[(C)] Perpetual Debentures (also called Irredeemable Debentures): These debentures do not have a fixed date of repayment specified. The company is not obligated to repay the principal amount during its lifetime, although interest is paid regularly. Repayment typically occurs only at the time of winding up or under specific conditions mentioned in the terms, but there's no standard undertaking for repayment at a fixed future date. This matches the description. \item[(D)] Registered Debentures: Payable only to the registered holder whose name appears in the company's Register of Debentureholders. Repayment terms exist. \end{itemize} Therefore, Perpetual Debentures are those without a standard undertaking for repayment.