A company like any other person can, when it borrows money, give its creditors security. Often it mortgages or charges its property to its debenture-holders.
Remedies Of Debenture Holders
1. He may sue for his principal and interest.
2. He may, petition under Sec. 439 for the winding up of
the company by the Court. But in addition he has also the following
courses open to him:
a. Debenture-holders’ action.
b. Appointment of receiver.
c. Foreclosure.
d. Sale.
e. Proof for the balance.
Creation Of Charges:
A company like any other person
can, when it borrows money, give its creditors security. Often it mortgages or
charges its property to its debenture-holders. Fixed And Floating Charges:
Fixed charge:
A fixed or specific charge is one
which is created on some specific and definite assets of the company, e.g., a
charge on land and building. Floating charge:
A floating charge is an equitable
charge which is created on some class of property which is constantly changing,
e.g., a charge on stock-in-trade, trade debtors, etc. New financial instruments:
Issuer of capital shall make
instruments such as Deep Discount Bonds, Debentures with Warrants, Secured
Premium Notes etc., so that an investor can make reasonable determination of
the risks, returns, safety and liquidity of the instruments. Tags : Business Environment and Law-Debentures
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