Lynne Counsell briefly outlines the nature of the debenture trustee and highlights
specific points relating to their powers and duties
(taken from Issue No 18 – January 2002)
The meaning of debenture trustee
A company, if empowered by its articles, can issue stock as a form of debt security to raise funds. The term `debenture stock` is often used to describe such stock which is secured by a charge or mortgage whereas the term `loan stock` is used to describe stock which is not so secured. In this article the term `debenture trustee` simply means the trustee of debenture stock, namely stock issued as a loan security to secure the debts of the company. Debenture stock is merely borrowed capital consolidated into one mass for the sake of convenience. Instead of each lender having a separate bond or mortgage, he has a certificate entitling him to a certain sum, being a portion of one large loan; and generally debenture stock differs from a debenture in form rather than in substance.1`
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The Trust Quarterly Review is published in partnership with STEP, it discusses matters of interest to trustees and executors with a focus on the particular interests of trust corporations in mind
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