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CS Executive · Company Law and Practice · Debt Instruments - Concepts

Anand holds debentures of Sundaram Engineering Ltd and wants to transfer them to his friend. Under the Companies Act, 2013, what is the legal nature of debentures and the manner of their transfer?

Debentures are movable property, and they are transferable in the manner provided by the articles of the company, as Section 44 states. Hence Anand's transfer is governed by Sundaram Engineering's articles, not by registration of a deed or Tribunal permission.

  1. AThey are immovable property transferable only by registered deed
  2. BThey are movable property transferable in the manner provided by the articles of the companyCorrect
  3. CThey are movable property transferable only with Tribunal permission
  4. DThey are actionable claims not transferable at all

Explanation

Section 44 provides that shares or debentures or other interest of any member in a company are movable property transferable in the manner provided by the articles. So the articles govern the manner of transfer. Tribunal permission or registered deed is not required by this section.

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