| Commentary

44 Redemption of debentures

| Commentary

44 Redemption of debentures

A debenture will normally state that the company will redeem it on a particular date. In addition, the debenture may stipulate that it is redeemable before that date, in which case this merely gives the company the option of redeeming early, but it will be under no obligation to do so1. Trust deeds or debentures often set up a fund for redemption referred to as a sinking fund2. Under this, the company covenants to set apart a sum out of profits for the purpose of the redemption. The company will sometimes effect a sinking policy with

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