Ans. This statement is False.
Reasons: According to Webster’s Dictionary, a Debenture is an interest-bearing certificate issued by a government or business, promising to pay to the holder specified sum at a specified date. In fact, there is no difference between Debentures and bonds.
(1) Debenture is a loan taken by company for medium to long period. Debenture holder therefore is the creditor of the company.
(2) Debenture capital is returnable and therefore has no permanency. Debenture holder earns interest as return.
(3) Debenture holder cannot participate in management of company. They cannot take any decision on matters of the company.
(4) Debenture holder has no voting rights on matters related to company like he cannot appoint Directors / Auditors of the company.
(5) The real owner of the company is the equity shareholder. Equity shareholders are risk bearers of the company and they are having the voting rights and taking participation in management of the company. Hence Debenture holders are not the owners of the company.
Reasons: According to Webster’s Dictionary, a Debenture is an interest-bearing certificate issued by a government or business, promising to pay to the holder specified sum at a specified date. In fact, there is no difference between Debentures and bonds.
(1) Debenture is a loan taken by company for medium to long period. Debenture holder therefore is the creditor of the company.
(2) Debenture capital is returnable and therefore has no permanency. Debenture holder earns interest as return.
(3) Debenture holder cannot participate in management of company. They cannot take any decision on matters of the company.
(4) Debenture holder has no voting rights on matters related to company like he cannot appoint Directors / Auditors of the company.
(5) The real owner of the company is the equity shareholder. Equity shareholders are risk bearers of the company and they are having the voting rights and taking participation in management of the company. Hence Debenture holders are not the owners of the company.
