Debenture creates a charge against some or all of the assets of the company.
Charge on debentures may be fixed or floating, depends upon the condition of issue.
Debentures may be redeemed after a fixed number of years or after a certain period has elapsed. Many debentures are issued with the notice that they may be redeemed at the option of the company within a specified period of time and at a price specified. The debentures may be redeemed in one of the four ways:
(a) By payment in lump sum at the end of a specified period of time; or
(b) By payment in annual installments;
(c) By purchasing its own debentures in the open market.
(d) By conversion into shares.
Debentures may be redeemed after a fixed number of years or after a certain period has elapsed. Many debentures are issued with the notice that they may be redeemed at the option of the company within a specified period of time and at a price specified. The debentures may be redeemed in one of the four ways:
(a) By payment in lump sum at the end of a specified period of time; or
(b) By payment in annual installments;
(c) By purchasing its own debentures in the open market.
(d) By conversion into shares.
For redemption of Debentures a company shall maintain Debenture Redemption Reserve Fund