Types of debentures

Simple or naked debentures: Where there is no charge created on the company’s property or assets, the debenture is described as naked or simple.

Types of debentures


Mortgage debentures: Mortgage debentures are issued on the security of the company’s assets. It gives a charge upon the whole or part of the company’s assets upon liquidation

Simple or naked debentures: Where there is no charge created on the company’s property or assets, the debenture is described as naked or simple.

In this case, there is no security for the debenture

Secured debenture: Secured debenture is the type whose repayment is guaranteed through a collateral security tendered by the borrower

Redeemable debenture: Redeemable debenture is repayable at a date which has been fixed or determined. A company may issue debentures which are liable to be redeemed

Irredeemable debenture: Irredeemable debenture is repayable only in the event of some specified contingency, such as winding up of the company.

It cannot be cashed at any time and it is bought solely for interest payments.

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