Question

Explain the following term/concept: Debenture Certificate

Hint:

Think of a debenture certificate as an official "IOU" from a company to its lender (the debenture holder). It’s a formal promise to pay back a loan with interest, just like a share certificate is proof of ownership.

Answer 1

Meaning: A debenture certificate is a formal, written document issued by a company under its common seal, serving as an acknowledgement of debt. It is the primary evidence of a loan raised from the public or institutions. It contains the terms and conditions of the loan, including the principal amount, the rate of interest, and the date of repayment (maturity date). Contents of a Debenture Certificate:

Name and address of the company.
Name and address of the debenture holder.
The total amount of the loan (face value of the debenture).
The rate of interest and the dates on which it will be paid.
The maturity date when the principal amount will be repaid.
Details of any security or charge created on the company's assets.