What are the different types of debentures?

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#1

The types of debentures are as follows:

  1. Secured and unsecured debentures : The debentures which CTeate a charge on the assets of the company are called secured debentures and which do not create any charge are known as unsecured debentures.
  2. First and second debentures : First debentures are the debentures which are repaid before other debentures are repaid. While the debentures which are paid after the first debentures have been paid back are known as second debentures.
  3. Registered and bearer debentures: The debentures which are duly recorded in the register of debenture holders maintained by the company and can be transferred only through a regular instrument of transfer are known as registered debentures while the bearer debenturers are those which are transferable by mere delivery.
  4. Convertible and non-convertible debentures : The debentures that can be converted into equity shares after the expiry of a specified period are known as convertible debentures while the debentures that cannot be converted are known as non-convertible debentures.
  5. Zero interest debentures (ZID) : The debentures which do not carry any explicit rate of interest are known as zero interest debentures. The return to the investor is equal to the difference between the face value of the debentures and its issue price.