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 characterized by the absence of a specified maturity date for repayment during the company's operational life.

Answer 1

The Correct Option is C

To solve the problem, we need to identify the type of debentures on which a company does not give any undertaking for the repayment of the borrowed money.

1. Understanding Debenture Types:
Debentures are debt instruments issued by a company to borrow money. Typically, companies provide an undertaking to repay the principal amount along with interest at a specified rate and time. However, there is a specific type of debenture where the company does not guarantee repayment of the principal.

2. Identifying the Debenture Type:
Debentures where the company does not give any undertaking for repayment are known as 'Irredeemable Debentures' or 'Perpetual Debentures'. These debentures do not have a maturity date, meaning the company is not obligated to repay the principal amount unless it chooses to do so (e.g., during liquidation). The company only pays interest periodically, and the principal remains outstanding indefinitely.

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