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Which of the following is not a characteristic of Bearer Debentures?
  • a)
    They are treated as negotiable instruments
  • b)
    Their transfer requires a deed of transfer
  • c)
    They are transferable by mere delivery
  • d)
    The interest on it is paid to the holder irrespective of identity
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which of the following is not a characteristic of Bearer Debentures?a)...
Characteristics of Bearer Debentures:
1. They are treated as negotiable instruments.
2. They are transferable by mere delivery.
3. The interest on it is paid to the holder irrespective of identity.
Explanation:
Bearer debentures are a type of debenture where the ownership is not recorded in the company's register. Instead, the debenture is transferred by physical possession or delivery. Let's examine each characteristic to determine which one is not applicable to bearer debentures:
1. They are treated as negotiable instruments: Bearer debentures are considered negotiable instruments, meaning they can be transferred from one party to another by delivery or endorsement. This characteristic allows for ease of transfer and liquidity.
2. They are transferable by mere delivery: Bearer debentures are transferable by the mere delivery of the physical debenture certificate. No formal deed of transfer or registration is required. This makes the transfer process simpler and less bureaucratic.
3. The interest on it is paid to the holder irrespective of identity: Bearer debentures entitle the holder to receive interest payments from the issuing company. The identity of the holder is not relevant for the payment of interest. This characteristic ensures that the holder of the debenture receives the interest payment regardless of who currently possesses the debenture.
Conclusion:
From the given characteristics, option B is not a characteristic of bearer debentures. The transfer of bearer debentures does not require a deed of transfer. Instead, they are transferred by mere delivery.
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Which of the following is not a characteristic of Bearer Debentures?a)They are treated as negotiable instrumentsb)Their transfer requires a deed of transferc)They are transferable by mere deliveryd)The interest on it is paid to the holder irrespective of identityCorrect answer is option 'B'. Can you explain this answer?
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