Debenture is a deed or instrument issued by a company or public body as a security for a loan of money. It charges the property of the company with the payment of interest, and the repayment of the principal at some fixed period, usually three, five, or seven years. Debentures vary in their terms, style, and legal incidents according to the statutes under which power is given to issue them; but the most common form is that of the railway debenture, which is a mortgage issued under the Companies Clauses Act, 1843, and containing an assignment of the whole undertaking and receipts of the company. Debentures of a company registered under the Companies Act, 1862, generally create a charge on the property of the company, but are sometimes merely bonds, or in the form of promissory notes. In many cases the issue of debentures has been superseded by the issue of debenture stock, which, with the interest thereon, is a charge on the undertaking of the company prior to all shares or stock of the company. It is capable of being transferred in any amount, and does not, like a simple debenture, represent the title of the original holder by an instrument complete in itself, but requires entry in a register.
The term debenture is also used by officers of excise to denote a certificate entitling a merchant who exports goods to receive bounty or draw-back.