Debentures Definition  

Definition of a debenture. A debenture is a loan issued by a firm. It usually involves a fixed repayment schedule, in terms of both time and interest. If the firm keeps to the terms of the debenture, the person who owns the debenture has no claim on the company and no voting rights. However, if the firm were to default on the repayment of a debenture. The holders of the debentures would have rights over the company. They would have access to assets before even ordinary shareholders.

A convertible debenture occurs when at the end of a certiain time frame a debenture can be converted into shares.

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