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

Mr. Raghav holds debentures of Eastern Alloys Ltd and wants to sell them to a friend. Which statement is correct under the Companies Act, 2013?

Debentures are movable property transferable in the manner provided by the company's articles. Section 44 of the Companies Act, 2013 says so, so no Tribunal permission is needed and they are not immovable property requiring registration.

  1. ADebentures are immovable property and need registration to transfer
  2. BDebentures are movable property transferable in the manner provided by the articlesCorrect
  3. CDebentures can be transferred only with Tribunal permission
  4. DDebentures are not transferable once issued

Explanation

Section 44 says shares or debentures or other interest of a member are movable property transferable in the manner provided by the articles. They are not immovable property, and no Tribunal permission is required by this section.

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