Page 5 - LN ISSUE OF DEB

Non-convertible debentures, which are simply regular debentures, cannot

be converted into equity shares of the liable company. They are
debentures without the convertibility feature, they usual y carry higher

interest rates than their convertible counterparts.

On basis of Security, debentures are classified into:

Secured Debentures: These instruments are secured by a charge on the

fixed assets of the issuer company. So if the issuer fails on payment of

the principal or interest amount, his assets can be sold to repay the
liability to the investors.

Unsecured Debentures: These instrument are unsecured in the sense that

if the issuer defaults on payment of the interest or principal amount, the
investor is treated like along other unsecured creditors of the company.

From redemption point of view

Redeemable Debentures:- Redeemable debentures are those which are

redeemed or paid off after the termination of fixed term. The amount paid

off includes the principal amount and the current year’s interest. The

company always has the option of either to redeem a specific number of
debentures each year or redeem al the debentures at specified date.

Irredeemable or Perpetual DebenturesIrredeemable debentures are those

:-

debentures which do not have any fixed date of redemption. They are

redeemed either in the event of winding up or at a very remote period of
time. Irredeemable or perpetual debenture holders can never force the

company to redeem their debentures.

Debenture Trust Deed