Debenture Holders are
By BYJU'S Exam Prep
Updated on: November 9th, 2023
Debenture holders are termed as Creditors. They are the lenders to the company, and hence, Debentures are Creditors. Shareholders participate in the decision-making process, while Debenture holders cannot participate in the decision-making process. A debenture holder is simply a creditor of the firm because debentures are a loan component. Debenture holders may convene separate meetings or votes, such as on modifications to the rights connected to the debentures.
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Who is Called a Debenture Holder?
Holders of debentures are referred to as creditors. Debentures are creditors since they are the ones that lend money to the corporation. Holders of Debt Securities are not permitted to participate in the decision-making process, whereas shareholders can. There are two ways businesses can obtain money from outside parties: Equity and Debt.
The debenture is equivalent to corporate debt that is subject to a set rate of interest. Because the debenture holders will get this money, they are regarded as the company’s creditors and have priority over the shareholders.
- The Latin verb “debere,” which means “to owe,” is where the word “debenture” originates.
- It is a written document signed with the firm’s common seal and recognizes a loan to the company.
- It includes a clause stating that the principal will be repaid after a certain period or at regular intervals and that interest will be paid at a preset rate on fixed dates, often every half-year or year.
The term “debenture holder” refers to a person who holds debentures. They are the people or businesses that buy other companies’ debentures. They have no interest in the organization’s governance and administration.
Summary:
Debenture Holders are
Creditors are the ones given the term of Debenture holders. They are as good as a company’s debt that carries a certain amount of interest. The holders of debentures are those who subscribed for them. A debenture holder is solely a firm creditor since debentures are a component of loans. Holders of debentures may have separate meetings or votes, but they cannot vote at the company’s shareholder’s meeting.
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