Bearer Debentures – an unregistered unsecured bond

A bearer debenture is an unregistered unsecured bond. Bearer debentures are similar to share warrants in that they too are negotiable instruments, transferable by delivery. These are the Debentures that can be transferred by mere delivery and are payable to the bearer of the instrument, i.e. the person holding the instrument. The issuing corporation does not keep a record of the purchaser’s name, nor is the owner’s name listed on the debenture. These are a negotiable instrument with a particular maturity period and coupon interest rate.

Bearer debentures are not recorded in the company’s debenture-holders’ register. They can be transferred by mere delivery and registration of transfer is not necessary.

Debentures are the debt securities issued by a company with the intention to pay interest in lieu of the money borrowed for a predefined period.  The interest on bearer debentures is paid by means of attached coupons. The owner cannot get a replacement debenture if the original one is lost or stolen. On maturity, the principal sum is paid to the bearers. The maturity date is printed on the bond and can be redeemed up to thirty days from the maturity date. It can be transferred by mere delivery and are payable to the bearer of the instrument. i.e. the person holding the instrument. It can be transferred by mere delivery and hence, are payable to the bearer of the instrument.

Features and benefits of bearer debentures

  • Bearer Bonds are unregistered bonds that can be transferred by delivery only.
  • No records are kept in the record of the company’s bond owners to obtain ownership of these securities.
  • These bonds are issued financially, that is, on paper.
  • These bonds can be exchanged within thirty days from the due date printed on the link.

Bearer debentures are unregistered debentures that can be transferred by mere delivery. Some bearer debentures have coupons that the owner must mail to the issuing corporation to receive interest payments. Records of Bearer Debentures are not maintained in the register of debenture holders, and registration of transfer is not necessary. No records are maintained in the company’s debenture-holders’ register for the ownership of these securities.

 

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