CS Executive · Company Law and Practice · Debt Instruments - Concepts
Rohan holds debentures of Sagar Chemicals Ltd. Under the Companies Act, 2013, how are the debentures of a company treated in law?
Debentures are movable property transferable in the manner provided by the articles of the company. Section 44 declares shares or debentures to be movable, and the articles, not a registered deed or unrestricted freedom, govern how they are transferred.
- AImmovable property, transferable by registered deed only
- BMovable property, transferable in the manner provided by the articlesCorrect
- CMovable property, freely transferable without regard to the articles
- DActionable claim not capable of transfer
Explanation
Section 44 states 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 transfer mode, ruling out free transfer.
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