Debentures

How do I go about finding out the information on these two policies?

Preference shares are equity form of capital while debentures are debt form of capital both type of capital has preference to be paid before the normal share capital holders in case of liquidation but interest paid on debentures is tax deductable which means that by paying interest company can save tax as interest reduces the net income of company while preference share holders receive interest after tax deducted net profit.

It is capital loss of the company. It comes only in the time when redeem debenture. It is shown when we issue the debenture because it is one of the redeemable condition. it is loss of future but comes in balance sheet as separate account the name of premium redemption account in liability side so, it is carried at the time of issue.

Debentures also known as loan notes lean more towards non current liabilities i.e. bank loans, than ordinary shares which is equity.

The interest from debentures may be higher than dividen paying shares in the early part of a firm's life; later on it may be more advantageous to hold ordinary shares as dividends paid out can outperform capital gain from interest paid on loans.

Also ordinary shares have voting rights; if enough are purchased by a stakeholder, the stakeholder can influence the company's direction and use of profits. Debenture owners cannot do the same.

How they should be used in fundraising in relation to the possible financial distress?

A portfolio comprises of two stock A and B. Stock A gives a return of 9% and Stock B gives a return of 6%. Stock A has a weight of 60% in the portfolio. What is the portfolio return?

A debenture invests fund in the company and is sure of its return eventhough the company fails through its corporate stock.

An investor can only gain depending upon the market condition.

Interest payable or paid to lenders on debentures.

these debentures which give an option to their holder to convert them into equity or preference shares at specified rate of exchange after a certain period. when such debenture holders exercise the right of convertion, they cease to be lenders to the company and become its members. the convertible debentures may be fully convertible or partly convertible

what is debenture

Debenture is a debt instrument to raise funds. It has a maturity period associated with it. At the end of the maturity, the company(borrower) should return the interest and principal amount.

Debenture Redemption Reserve is an amount kept as reserve for paying the debenture holder at the end of the maturity period.

The Debenture loan is an unsecured debt backed by the credit worthiness of the borrower. The interest is calculated based on the 10-year Treasury rate plus a market-driven spread, which is currently about 65-75 basis points.

Typically no, unless this is agreed upon between the debt holder and the issuing institution. The exception to this is callable debt, which allows the issuing corporation to pay off the debt within a certain window, specified by the terms of the issuance.

If for example a company obtains a secured loan or overdraft facility from its bank, the latter is likely to insist that the company seals the banks standard form of debenture creating the charge and giving the bank various safeguards and powers

fixed deposit has its fixed term, but debenture does not have any term. fixed deposit can be invested in eqty,debt or any other , but the debenture is debt only.

Value of debenture depends upon where you are trying to cash it.

Legally speaking, the company or the organization which has issued the debentures has to honor the face value, presuming they are redeemable type, of course.

However, if you try to trade the debentures on stock exchange, several economical, financial and other considerations come in play. Naturally the price offered will reflect all these. It may not be the same as the one paid at the time of purchase .

A convertible debenture is a type of convertible bond. However, a debenture is unsecured debt, which means that there is no collateral for the bond. The alternative to a debenture would be a secured bond such as a mortgage bond that would be secured by real estate. If the company goes out of business, the collateral for the secured bonds would be used to pay off those bonds and the holders of the debentures would be paid from whatever is leftover. Most convertible bonds are debentures.

Indian Companies Act of 1956 added during an amendment in the year 2000. It states Indian company that issues debentures must offer debenture redemption service to protect investors against the possibility of company default. If a company does not create a reserve within 12 months of issuing the debentures, they will be required to pay 2 percent interest in penalty to the debenture holders. Only debentures that were issued after the amendment in 2000 are subject to the debenture redemption service.

From an investment or shareholder standpoint is a good thing

A debenture demonstrates confidence in the company. It is the same thing as lending someone money with interest without that someone puttiing anything up as collateral to guarantee the loan.

In other words, as the lender you are more sure that you will be paid back plus interest and therefore do not require anything as collateral.

It is the same principle as buying a government bond. As the purchaser, you know for sure you will get paid back plus interest.

debenture holders are not the owner of the company.they are considered as the creditors of the corporation or in other words the company borrow money from them through issuing debentures.moreover, they has no voting rights in the company's general meeting.

it is a document that serve as evidence of a debenture for a debenture share holder

Recently Engro Pakistan sold debentures to general public!

What are the risk relating to th debentures?

When debentures are redeemed payment is made from a reserve which is created at the time of purchase of such debentures,therefore at the time of payment first it is transferred to general reserve then as it is expenditure to company.

interest