A company instead of issuing individual debentures, evidencing
separate and distinct debts, may create one loan fund known as "debenture stock"
divisible among a class of lenders each of whom is given a debentures stock certificate
evidencing the parts of the whole loan to which he is entitled.
This debenture stock, which is analogous to the loan
stocks of governments and local and public authorities, is then the
indebtedness itself and the certificate evidences the stockholder's interest in
it. A consequence of the distinction is that whereas a debenture is a single
thing which can be legally transferred only as one entity, debenture stock can
be sub-divided and transferred in any fractions which the holder wishes.
Further, "debenture stock" must be fully paid, debenture may or may
not be fully paid. However, for the purpose of the Companies Act, 'debenture' includes
'debenture stock'.
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