Section A

Which of the following best defines a 'debenture'?

Answer options:

A share in the equity of the company.

A document issued by a company acknowledging a debt.

A dividend payment made to shareholders.

The legal process of winding up a company.

How to approach this question

Distinguish between loan capital and share capital terminology.

Full Answer

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

In corporate law, a debenture is a document issued by a company that acknowledges a debt. It is the standard term used for the loan capital of a company, and it may or may not be secured by a charge over the company's assets.

Common mistakes

Confusing debentures with shares.

Question 35 All questions Question 37

Practice the full ACCA LW — Corporate and Business Law Practice Exam 6

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