What Is The Difference Between Redeemable And Irredeemable Debentures?


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Mehreen Misbah Profile
Mehreen Misbah answered
The major difference that sets the redeemable and irredeemable debentures apart is the definition and pronunciation of the terms under which these debentures are issued – a very important attribute of debentures. In the case of redeemable debentures, the terms that are formulated are characterized by the requirement that the company who has been issued the debenture would have to repay the amount of the debenture either on a specific fixed date that was decided beforehand or upon the demand of the debenture holder or maybe after the company has been issued a notice.

As for irredeemable debentures, no specific date or time is fixed in advance for the prospect of payment or redemption. The company has an upper hand in this kind of debenture as there are no obligations on the company to pay back the money of the debenture on some fixed date or time and has the full authority to choose any time to pay back the debt that it owes to the debenture holder. Moreover the debenture holder could not demand the company to pay back the debt until the company is a going concern and furthermore does not make any default in the payment of interest.

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