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C H A P T E R

Company Accounts—Issue of Debentures

MEANING OF KEY TERMS USED IN THE CHAPTER

1. Debenture Debenture is a written acknowledgement of Debt issued by the
company.
According to Section 2(30) of the Companies Act, 2013,
‘Debenture’ includes debenture stock, bonds or any other
instrument of a company evidencing a debt, whether
constituting a charge on the assets of the company or not.
2. Debentureholder Debentureholder is the person to whom debentures are issued.

3. Issue of Debentures for Cash It means issue of debentures against consideration being
received in cash.
4. Issue of Debentures for It means issue of debentures against consideration not
Consideration other than Cash being received in cash but received in kind, i.e., assets
or services.
5. Issue of Debentures as It means that the debentures have not been issued for
Collateral Security consideration received in cash or in kind but have been issued as
a security for loan taken.
6. Issue of Debentures at Par It means that the issue price and the nominal (face) value of
debentures are same.

7. Issue of Debentures at Premium It means that the issue price of the debenture is higher than its
nominal (face) value.
8. Issue of Debentures at Discount It means that the issue price of the debenture is lower than its
nominal (face) value.
9. Redemption of Debentures at Par It means that the redemption value and the nominal (face)
value of debenture is same.

10. Redemption of Debentures It means that the redemption value of the debenture is
at Premium higher than its nominal (face) value.
11. Interest on Debentures It is the cost of servicing the loans raised by the issue of
debentures.