Q. Consider the following statements:
- A debenture Holder is also a creditor to the company
- A debenture Holder is also eligible to vote in the company
Which among the above statements is/ are correct?
Answer:
Only 1 is correct
Notes:
- A debenture Holder is also a creditor to the company: This statement is correct. A debenture is a type of debt instrument that represents a loan made by an investor to a company. When an investor purchases a debenture, they are lending money to the company. Therefore, a debenture holder is considered a creditor of the company.
- A debenture Holder is also eligible to vote in the company: This statement is incorrect. Debenture holders are creditors, not shareholders. Only shareholders have voting rights in a company. Debenture holders do not typically have voting rights, unless specified in the debenture agreement.