OMTEX CLASSES: State the position of debenture holders in a company.

State the position of debenture holders in a company.

Ans. (1) Debenture is the debit/loan taken by the company. Therefore the investor is known as debenture holders.
(2) Debenture is a borrowed capital and the debenture holder is creditor of the company.
(3) Debenture holders risk is lesser than shareholders.
(4) Debenture holders is a creditor and therefore he cannot participate in management of the company and has no voting rights.

(5) Debenture holders are given priority in repayment over shareholders as being the creditors of the company.