Accounting Education defines debenture holders as persons, companies or firms that willingly purchase the debentures of another company or companies. E-conomic explains that debentures are a form of long-term loans. If the debt involves buying bonds from the government, the debenture holders are technically bondholders. Even though they do not have voting rights during annual company meetings, they have the right to get fixed interests on the loans or debt.
Whether the company has made profits or not, debenture holders are entitled to interest on debentures. However, the interest paid to any debenture holder is purely charged as a charge of the company’s profits, according to E-conomic. On the same note, interests on debentures are usually paid out in the form of capital. Preserve Articles warns, a company reserves the right to repay the debentures in strict accordance with the terms and conditions on which they were issued.
Whereas shareholders are concerned with the affairs of the company, debenture holders are not concerned with the daily operations or management of the company, explains Financial Agenda For Mass Empowerment or FLAME. FLAME further states that the role of a debenture holder is to offer financial support to the company by acting as a creditor.
Debenture holders enjoy a number of rights, including the right to take legal action against the company should the company fail to remit owed interest. On the same note, Accounting Education further states that debenture holders have a right to obtain the company’s annual reports.