| Commentary

14.4 Transfers free from equities

| Commentary

14.4 Transfers free from equities

In the absence of a provision to the contrary, a transferee of a debenture1 will take subject to any subsisting equities between the company and the original holder even if he is a transferee for value without notice2. A debenture does, therefore, usually provide that the debenture is transferable free from equities between the company and the original or, indeed, any intermediate holder3. This is intended to enable the debenture to be quasi-negotiable by contract.

The company may also seek to protect itself by adding a condition to the effect

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