When can be debentures redeemed?

When can be debentures redeemed?

According to Rule 18(7) of the Companies Share Capital and Debenture Rules 2014 at least 15% of the face value of the debenture amount is to be redeemed during the year the company is making investments in specified securities. This is required to be done within the 30th of April of the maturity year.

Can we redeem debentures?

Debentures are usually redeemable i.e. either redeemed in cash or convertible after a time period.

What is issue and redemption of debentures?

The word ‘debenture’ translates to a written instrument as debt. When a company wishes to raise capital but does not want to dilute their equity they issue debentures.

What is the difference between issue of debenture and redemption of debenture?

A debenture is said to be issued at a premium when the Issue price is more than the nominal (face) value of a debenture. Premium on redemption of debenture implies that the company is paying more than what it got at the issue of the debenture to the debenture holder at the time of redemption .

Can debentures be redeemed before maturity?

This one-time method is considered to be among the simplest redeeming options. As per this method, debenture holders receive the promised sum on the prefixed date. The issuing company may decide to pay off the debenture amount before its maturity.

How do I redeem old debentures?

Methods of Redemption of Debentures

1. Lump-sum payment on a prefixed date. This one-time method is considered to be among the simplest redeeming options.
2. Payment in annual instalment.
3. Debenture redemption reserve.
4. Call and put option.
5. Conversion into shares.
6. Buy from the open market.

What are the types of debentures available?

The major types of debentures are:

• Registered Debentures: Registered debentures are registered with the company.
• Bearer Debentures:
• Secured Debentures:
• Unsecured Debentures:
• Redeemable Debentures:
• Non-redeemable Debentures:
• Convertible Debentures:
• Non-convertible Debentures:

What is debenture with example?

A debenture is a bond issued with no collateral. Instead, investors rely upon the general creditworthiness and reputation of the issuing entity to obtain a return of their investment plus interest income. Examples of debentures are Treasury bonds and Treasury bills.

How is debenture issued?

Debentures can be issued for non-cash considerations. The company may have purchased assets from some vendors or acquired some other business. Then instead of paying cash, the company may issue debentures to such vendors. Such an issue for debentures can be at par, or for a discount or at a premium.

What is a debenture in simple terms?

A debenture is a type of debt instrument that is not backed by any collateral and usually has a term greater than 10 years. Debentures are backed only by the creditworthiness and reputation of the issuer. Both corporations and governments frequently issue debentures to raise capital or funds.

Who is called debenture holder?

A person having the debentures is called debenture holder whereas a person holding the shares is called shareholder. A shareholder or member is the joint owner of a company; but a debenture holder is only a creditor of the company. Shareholders are invited to attend the annual general meeting of the company.

What do you mean by redemption of debentures?

This process of discharging the company’s debt is known as the redemption of debentures. Let us learn more about the various methods of redemption of debentures and their accounting treatments. Redemption of debentures refers to the repayment of these debentures by the company to the debenture holders.

How does sinking fund work for debentures redemption?

(a) Sinking Fund Method/Debenture Redemption Fund Method: Under this method every year the company sets aside a certain part of profits and credits the same to debenture redemption fund. To collect the required funds at the time of redemption, it invests the same in first-class securities.

What does DRR stand for in debentures?

What is Debenture Redemption Reserve (DRR)? A debenture redemption Reserve can be referred to as a provision which states that any company, firm or enterprise in the country which issues debentures are required to open a redeeming service of the debenture to show an effort to ensure repayment of borrowed funds.

When do you get paid back your debentures?

Redemption of Debentures Debentures are debt instruments. Hence when their period expires, debenture holders are paid back their principal amount. This process of discharging the company’s debt is known as the redemption of debentures.