Section A

In company law, what is a debenture?

Answer options:

A type of preference share.

A document issued by a company acknowledging a debt.

A court order to wind up a company.

A register of the company's shareholders.

How to approach this question

Define the term 'debenture' in the context of corporate finance.

Full Answer

B.A document issued by a company acknowledging a debt.✓ Correct

A debenture is a document that either creates a debt or acknowledges it. It is the standard term used for a company's long-term loan capital, often secured by a charge over the company's assets.

Common mistakes

Confusing debentures (loan capital) with shares (equity capital).

Question 37 All questions Question 39

Practice the full ACCA LW — Corporate and Business Law Practice Exam 5

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