Commentary

13 Principal clauses found in a debenture

COMPANIES vol 10(2) borrowing and debentures
| Commentary

13 Principal clauses found in a debenture

| Commentary

13 Principal clauses found in a debenture

There are four basic clauses which are usually found in a debenture1. These are:

  1. 13.1

        a promise by the company to repay the principal of the debt on a certain date;

  2. 13.2

        a promise to pay interest in the meantime;

  3. 13.3

        a charge on the company’s assets; and

  4. 13.4

        a provision that the debenture is issued with the benefit of, and subject to, certain conditions which are defined.

Provision may also be made to ensure that the principal money is repayable in certain events, commonly described as ‘events of default’2. These basically relate to

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