5. Is a document that ensure loan which made between bank or financial institution with company. That loan usually guaranteed with fixed charge or float charge on company’s assets. Condition on loan repayment should be made through an agreement that agree by both parties. Usually repayment may be requested automatically in the event of dissolution of company or other events which caused company fail to explain company debts.
14. are secured by a first mortgage over land of the borrowing corporation or by any debentures issued by the borrowing corporation to the public or any debenture to which the trustee corporation, or its related corporation, is not beneficially entitled; or
15.
16. if the debentures or trust deed makes provision for the appointment of a successor to a retiring trustee, the appointment may subject to section 74 be made in accordance with that provision;
17. where no provision has been made in the debentures or a trust deed for the appointment of a successor to a retiring trustee, the borrowing corporation has the power to appoint a successor who is qualified for appointment pursuant to section 74.
18. a borrowing corporation may with the consent of an existing trustee appoint as successor to the existing trustee any corporation which is qualified for appointment pursuant to section 74. Such as power may be exercised by the borrowing corporation notwithstanding anything in the Act or in any debentures or trust deed; and
19.
20. satisfy itself that the contents of the prospectus offering the debentures are consistent with the terms of the debentures or with the relevant trust deed;
21. ensure that the borrowing corporation complies with the registration requirements in respect of the charges created in relation to the debentures;
22. exercise reasonable diligence to ascertain whether the borrowing corporation and any of its guarantor corporations have committed any breach of the covenants, terms and provisions of the debentures or trust deed;
23. take all steps to have the breach remedied by the borrowing corporation and any of its guarantor corporations if the breach will materially prejudice the security, if any, for the debentures or the interests of the debenture holders;
24. devise proposals for the protection of the investment of the debenture holders where the borrowing corporation or any of its guarantor corporations fail when so required by the trustee to remedy any breach of the covenants, terms and provisions of debentures or the trust deed; and
25. give to the debenture holders a statement explaining the effects and recommend to them an appropriate course of action to be taken when the borrowing corporation proposes a compromise or arrangement.Advantages of Debentures <br />There is an improvement in the financial structure of the company, because the extra resources (debentures) are transformed into own resources (shares). It transforms debt into capital.<br />The financial cost is lessening, because if the investor chooses for the conversion they don’t have to obey the requisites from the debentures: to pay interests and to refund the capital. On the other side, the interests from the debentures or bonds are usually lower than that on the market, this way, in case of not converting, the company will finance itself with cheap debt.<br />The sooner the conversion is made, the greater are the discounts, so the lesser are the numbers of shares that you can obtain with each debenture.<br />The holders of the debentures are entitled to a fixed rate of interest. It can be presented as quot;
5% Debenturequot;
.<br />Debentures are for those who want a safe and secure income as they are guaranteed payments with high interest rates.<br />They have priority over other unsecured creditors when it comes to debt repayment.<br />Conclusion <br />On a usual basis, a debenture is in the form of a certificate that is issued under the seal of a company or on behalf of it. Furthermore as mentioned before a debenture is a clarion acknowledgement and recognition about the fact that a loan has been taken and needs to be paid back. A debenture also signifies very clearly as to what amount of the loan would be paid back on which particular date leaving no qualms behind. Moreover a debenture ensures the payment of interest until the principal sum is completely paid back. A debenture also creates a charge on the prospect of the undertaking of the company or sometimes on any class of its assets. Debenture may have a term of 30 years or more.<br />Frequently, debentures will have an indenture which is a contract protecting the rights of the debenture holders. It will define what acts constitute default by the corporation as well as stipulate the rights of the holder default. <br />A debenture is basically a way of giving loan to the Company. When companies issue debentures to the public, companies are required to appoint a trustee to the debenture holders. Qualifications and duties and obligations have been determined by the trustee Companies Act 1965. Therefore, company must comply with these regulations because they are made to safeguard the interests of holders of debentures of the company.<br />