We want LI to be one of the friendliest places on the internet, where lawyers and law students help each other with their career related queries and occasionally discuss other stuff that might affect their lives too. In other words:
1. Be kind, respectful and helpful to each other.
2. Be bona fide, truthful, genuine and curious.
3. Assume the best intention of others.
Therefore, in using the site, you must agree to do your best to uphold these community guidelines.
Note that what you find here is written and moderated by anonymous people on the internet.
Therefore everything you read here is very likely unverified, rumour, speculation and/or downright false.
In continuing to read anything here, you must therefore agree not to take anything you read here as factual and that you will exercise due caution, diligence and common sense before acting on any information you may come across here.
You also agree to report any inaccurate or malicious comments with the buttons. Moderators take action within 24 hours, as required and appropriate under law.
Our full terms and conditions apply too.
Do you solemnly agree to all of the above?
Debenture is a specific format of instrument and whilst it represents a debt, is different from loan.
Also, any company may issue debenture, but unless specific thresholds are met, a company cannot accept deposit.
To summarise, all debentures (unless excluded in terms of Acceptance of Deposit Rules, basis the subscriber (such as company) or nature of instrument (item (ix) and (ixa)) ) are deposit, but not all deposits are debentures.
Also, deposits need to be repayed within 3 years while debentures can remain outstanding for 20 years.
Deposits can only be raised through members.
(And persons other than members if public company crosses a certain threshold prescribed.)
Further, certain debentures are convertible into equity shares but deposits cannot be converted into equity.
I had a doubt w.r.t the distinction between deposits and debentures under the CA, 2013.
So, apart from the fact that the definition of deposits excludes certain kinds of debentures, why is the distinction between deposits and debentures made?
Can someone please explain the rationale?