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Who are the Debenture Holders of a Company?

>> April 14, 2011

Debenture holders or bondholders are the persons, firms or companies who purchase the debentures of other company. If they give debt to govt. by buying bond, they will be bondholders.

Debenture holders can not vote in annual general meeting but they have only right to get fixed interest on their given debt or loan. This interest is given to debenture holders whether company has earned profit or not. Time to time, company offers to public for their investment in company's debentures. Terms and conditions are on the debenture or bond. These days, non paper debentures are also allowed by total keeping total record online. If company is liquidated, they get preference for getting their loan. If a company wants to full control and to do trading on equity, company can issue debentures and  can get fund for operation.

Rights of Debenture holders  

1. To transfer the bearer debentures.  
2. To get interest on given loan.
3. To take legal action against company, if they did not get interest or their principal amount.
4. To obtain annual reports, auditor’s report, profit and loss account and balance sheet’s copies.
5. Convertible debentures or with special resolution and acceptance of debenture holder, debentures can be converted in equity shares. After this, they can vote for taking any decision in annual general meeting.

Related : Who are the Shareholders of a Company?

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