Debenture

Debenture – A medium- to long-term debt instrument used by large companies to borrow money. The term may be used interchangeably with bond, loan or note. A debenture is generally freely transferable by the holder who has no rights to vote in the company’s general meetings of shareholders, but who may have separate meetings; or votes, for example, on changes to the rights attached to the debentures. The interest paid to holders is a charge against profit in the company’s financial statements. A debenture may be convertible into equity shares of the issuing company after a predetermined period of time; it may also be non-convertible, and would usually carry a higher interest rate than a convertible debenture.