Step 1: Understanding the Question:
The question asks to identify which statement is incorrect regarding "Bearer Debentures".
This topic relates to the classification of debentures based on the mode of transfer and registration.
Step 2: Key Formulas and Approach:
The approach involves comparing the characteristics of Bearer Debentures with Registered Debentures.
1. Bearer Debentures = Transfer by Delivery (No registration).
2. Registered Debentures = Transfer by Deed (Registration required).
Step 3: Detailed Explanation:
Definition of Bearer Debenture: A bearer debenture is one that is payable to the person who holds the physical certificate. The company does not maintain a record of the names and addresses of these holders in its register.
Transfer Method: Because the company doesn't keep a record, these debentures are transferable by "mere delivery". Just like a currency note, whoever possesses it owns it. This makes statement (C) correct.
Negotiability: Since they are transferable by delivery, they are considered negotiable instruments. This makes statement (A) correct.
Interest Payment: Interest is usually paid via coupons attached to the certificate. The person who presents the coupon gets the interest, irrespective of who they are. This makes statement (D) correct.
The Incorrect Statement: A "deed of transfer" is a formal legal document used for "Registered Debentures" where the company must update its records. For bearer debentures, such a document is entirely unnecessary. Thus, statement (B) is the false characteristic.
Step 4: Final Answer:
The requirement of a deed of transfer is not a characteristic of bearer debentures; it is a characteristic of registered debentures.
The correct option is (B).