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Revision Flowchart: Issue and Redemption of Debentures
The document Revision Flowchart: Issue and Redemption of Debentures is a part of the Commerce Course Accountancy Class 12.
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FAQs on Revision Flowchart: Issue and Redemption of Debentures
| 1. What are debentures? |  |
Ans. Debentures are long-term securities issued by companies and governments to raise capital. They represent a loan made by the investor to the issuer, which pays a fixed rate of interest over a specified period and returns the principal amount at maturity.
| 2. What is the process of issuing debentures? | |
Ans. The process of issuing debentures involves several steps: Firstly, the company must obtain approval from its board of directors and shareholders. Next, it prepares a prospectus detailing the terms of the debenture, including interest rates and maturity dates. After this, the debentures are offered to the public or specific investors, and upon subscription, the funds are raised.
| 3. How are debentures redeemed? | |
Ans. Debentures can be redeemed either at maturity or through early redemption. At maturity, the issuer repays the principal amount to the debenture holders. Early redemption occurs if the issuer decides to pay off the debentures before the maturity date, which may be stipulated in the terms of the debenture. This process often involves paying a premium on the redemption amount.
| 4. What are the different types of debentures? | |
Ans. There are several types of debentures, including convertible debentures, which can be converted into equity shares; non-convertible debentures, which cannot be converted; and redeemable debentures, which are repaid at a future date. Additionally, there are secured debentures that are backed by assets and unsecured debentures that are not secured by any collateral.
| 5. What is the significance of debenture covenants? | |
Ans. Debenture covenants are clauses in the debenture agreement that set restrictions on the issuer. They are significant because they protect the interests of debenture holders by ensuring that the issuer maintains certain financial ratios, limits additional debt, or meets specific operational benchmarks. Breaching these covenants can lead to default, giving debenture holders certain rights.
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Apr 26, 2026 Last updated
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Document Description: Revision Flowchart: Issue and Redemption of Debentures for Commerce 2026 is part of Accountancy Class 12 preparation. The notes and questions for Revision Flowchart: Issue and Redemption of Debentures have been prepared according to the Commerce exam syllabus. Information about Revision Flowchart: Issue and Redemption of Debentures covers topics like and Revision Flowchart: Issue and Redemption of Debentures Example, for Commerce 2026 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Revision Flowchart: Issue and Redemption of Debentures.
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