In company law, what is a debenture?

Answer options:

A document acknowledging a debt owed by the company, often secured by a charge over assets.

A type of equity share that carries no voting rights.

A statutory register of the company's members.

A resolution passed by the creditors of an insolvent company.

How to approach this question

Define the term used for corporate loan capital.

Full Answer

A.A document acknowledging a debt owed by the company, often secured by a charge over assets.✓ Correct

A debenture is a document issued by a company that acknowledges a loan. It is the standard method by which companies borrow large sums of money. Debentures are usually, but not always, secured by a fixed or floating charge over the company's assets.

Common mistakes

Confusing debentures (debt) with shares (equity).

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Practice the full ACCA LW — Corporate and Business Law Practice Exam 3

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