In the case of corporate finance, a debt is a medium- to long-term debt instrument used by large companies to borrow money at a fixed rate. The legal term "debenture" originally referred to a document that creates a debt or recognizes, but in some countries the term is now used interchangeably with bonds, loans or notes. Therefore, a debenture is like a loan certificate or a loan bond that demonstrates the fact that the company is obliged to pay a certain amount with interest and although the money collected by the obligations becomes part of the structure of capital of the company, capital. Senior debentures are paid prior to subordinated debentures, and there are various risk and return rates for these categories.
Obligations are generally freely transferable by the bondholder. Obligors are not entitled to vote at the company's general shareholders' meetings, but may have separate meetings or votes, for example, on changes in rights attached to the obligations. The interest they are paid is a charge against profit in the company's financial statements.
The term "debenture" is more descriptive than definitive. An accurate and comprehensive definition of a debenture has proved elusive. The English commercial judge, Lord Lindley, noted remarkably in one case: "Now, what is the correct meaning of the" debenture ", I do not know, I find nowhere a precise definition of it.