TYPES OF DEBENTURES :

(a) Naked or unsecured debentures

Debentures of this kind do not carry any charge on the assets of the company. The holders of such debentures do not therefore have the right to attach particular property by way of security as to repayment of principal or interest.

(b) Secured debentures

Debentures that are secured by a mortgage of the whole or part of the assets of the company are called mortgage debentures or secured debentures. Debenture trustees are appointed in whose favour securities are created and which hold the assets on behalf of the debenture holders. In case of default debenture trustee has the rights to sell the securities and pay the amount to holders.

(c) Redeemable debentures

Debentures that are redeemable on expiry of certain period are called redeemable debentures and these types of debentures are issued for fixed period.

(d) Perpetual debentures

If the debentures are issued subject to redemption on the happening of specified events which may not happen for an indefinite period, e.g. winding up, they are called perpetual debentures.

(e) Bearer debentures

Such debentures are payable to bearer and are transferable by mere delivery. The name of the debenture holder is not registered in the books of the company, but the holder is entitled to claim interest and principal as and when due. A bonafide transferee for value is not affected by the defect in the title of the transferor.

(f) Registered debentures 

Such debentures are payable to the registered holders whose name appears on the debenture certificate/ letter of allotment and is registered on the companies register of debenture holders maintained as per Section 88(1)(b) of the Companies Act, 2013.