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PROVISIONS UNDER COMPANIES ACT, 2013 FOR ISSUE OF DEBENTURES As per section 71(1) a company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption and such issue shall be approved by a special resolution at a general meeting.

Unsecured debentures are also known as Naked debentures.

To issue a debenture, a company issues a document called a debenture certificate, which is a promise to repay the borrowed sum. The certificate spells out terms such as the amount borrowed, the interest rate and other conditions of the loan.

Methods of Redemption of Debentures Lump-sum payment on a prefixed date. This one-time method is considered to be among the simplest redeeming options. ... Payment in annual instalment. ... Debenture redemption reserve. ... Call and put option. ... Conversion into shares. ... Buy from the open market.

(B) Unsecured Debentures? These type of debentures are unsecured in the way that if there is a default in payment of the principal amount or interest amount the debenture holder will have be along with other unsecured lenders and hence could not sell any property or anything for repayment hence they are also called ...

Companies sell the unsecured notes through private placements to raise money for purchases, share buyback, and other corporate purposes. Because unsecured debt isn't backed by collateral and is a higher risk, the interest rates offered are higher than secured debt backed by collateral.

As the name suggest, the debenture issue can be secured by a mortgage or charge on the property of the company and when the same are not secured they are known as unsecured (with nominal collateral security) debentures.