A Redeemable Debenture is one that is subject to repayment by the company to the debenture holder. The debenture may be repayable in lump sum on the date of maturity. The debenture may also be repayable in instalments during the specified period or on the specified dates. The dates on which the debenture will be repaid depend upon its terms of issue.
Investor Protection
All companies that raise funds in the form of redeemable debentures are required to create a Debenture Redemption Reserve. This is a statutory provision that was incorporated at Section 117C of the Companies (Amendment) Act, 2000. The Debenture Redemption Reserve is to be created out the profits of the company every year until the debentures are redeemed. The objective of making this mandatory provision is to protect the investors from the risk of default in repayment of the debentures on the due dates.
Security - Redeemable Debentures
The redeemable debentures may be either secured or unsecured. Security may be in the form of a fixed charge or a floating charge. When debentures are issued to the public, debenture trustees are appointed to hold the security on behalf of and to protect the interests of the debenture holders
I think redeemable debentures are a great way for anyone to invest. It gives you the surety of your money not being moved. Plus, you get to choose the dates on which the debentures will be liquidated for you. I think more people should look at redeemable debentures as a source of investment as it provides the stability that most investors are looking for.