What is meant by Issue of Debentures as Collateral Security? (C.B.S.E. 2018, 2020).


Sometimes, when a Company takes a loan, the Company may have to issue debentures as a subsidiary or secondary security in addition to the principal security. If a default is made either in the payment of interest or in the payment of principal debt, the lender will first realise its debt from the principal security. But if the full amount of debt is not realised from the principal security, it may claim all the rights of a debentureholder.

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