debenture

Definitions

Accounting

Economics

  • noun an acknowledgement of a debt issued by a limited company. Debentures pay a fixed interest and are very long-dated. They use the company’s assets as security. In the UK, debentures are always secured on the company’s assets; in the USA, debenture bonds are not secured.

Law

  • noun a document whereby a company acknowledges it owes a debt and gives the company’s assets as security

Origin & History of “debenture”

Debenture is simply an anglicization of Latin dēbentur, literally ‘they are due’, the third person plural present passive of the verb dēbēre ‘owe’. It supposedly arose from the practice of writing debentur on IOUs in the late middle Ages. The English word originally signified such IOUs issued by the government or the crown – certificates of indebtedness, to give them their formal designation – and it was not until the mid-19th century that the modern meaning, ‘unsecured bond backed by the general credit of a company’, came into use.
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