II. KINDS OF DEBENTURES
Debentures can be categorised under following
1. CONVERTIBILITY OF THE INSTRUMENT
Under the convertibility of instruments there are four types of debentures-
- Non Convertible Debentures
These are the type of debentures which cannot be converted into equity shares.
- Partly Convertible Debentures
- Fully Convertible Debentures
These are the debentures which can be fully converted into equity shares at issuer’s notice. Under these the ratio of conversion is decided by the issuer. When these are converted the investors enjoy the same status as they used to enjoy as ordinary share holders of the company.
- Optionally Convertible Debentures
Under this investor is the option whether they want to convert these debentures into the shares or not.
2. THE DEBENTURES CAN ALSO BE CLASSIFIED ON THE BASIS OF SECURITY
- Secured Debentures
The debentures can also be secured by a charge on the fixed assets. If the payment by the issuer is fail then his assets can be sold to repay the liability to the investors. Under Section 71 (3) of the Companies Act, 2013, Security Debentures can be issued by a company under such terms and condition that may be prescribed by the central government through the rules.
- Unsecured Debentures
III. CLASSIFICATION OF DEBENTURES
Debentures can be classified as
1. REGISTERED DEBENTURE
Registered debentures are the debentures under which the name of a particular person is mention on the debenture certificate. These debentures can be Transferable by a proper means of instrument. For transferring these debentures requirement specified under Section 56 of the Company Act, 2013 must be fulfilled.
2. BEARER DEBENTURES
Bearer debentures are debentures under which transfer is done by mere delivery. The person whom the debentures are transferred account holder in due course. This has been stated under the case of Calcutta Safe Deposit Company Limited vs. Ranjit Mathurdas Sampat.
IV. DEBENTURE STOCK
Debenture Stock is a loan fund under which a composite stock which raised by the company instead of issuing debentures. Debentures stock is a borrowed capital which has been consolidated from 1 mass for the sake of convenience. Debenture stock is the description of a debt.
V. VOTING RIGHTS
Under Section 71 (2) of the Companies Act, 2013 it has been stated that no company can issue debentures which can carry any voting rights. Under the rule (1) of Companies (Share Capital and Debentures) Rules, 2014, it has been stated that the company cannot issue secured debentures unless following conditions are fulfilled. The rate of redemption cannot exceed 10 years from the date of issue. The company which has been engaged in setting up of infrastructure projects can issue security debentures crossing 10 years but cannot exceed 30 years. The issue of debentures should be secured by creation of a charged. The security of debentures by the way of charge should be treated in the favour of debenture trustee.
 Debenture includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not.
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 Supra note 4.
 Supra note 2.
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 Supra note 13.
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 Safe Deposit Company Limited Vs. Ranjit Mathurdas Sampat, (1971) 41 Com Cases 1063.
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