Question

Which of the following is not a characteristic of Bearer Debenture? 
 

• A. They are treated as negotiable instruments.
• B. Their transfer requires a deed of transfer.
• C. They are transferable by mere delivery.
• D. The interest on it is paid to the holder irrespective of identity.

Hint:

Bearer Debentures are like "Cash" (No records). Registered Debentures are like "Property" (Official records/deeds required).

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Bearer debentures are those where the company does not maintain a record of the holder. The person who possesses the document is considered the owner.
Step 2: Detailed Explanation:
- Because they are not registered, they are considered negotiable instruments (A).
- They can be transferred simply by handing them over to someone else, known as "mere delivery" (C).
- Interest is paid to whoever presents the interest coupons, regardless of who they are (D).
- A "deed of transfer" is a formal legal document required for Registered Debentures, not for Bearer ones. Therefore, (B) is incorrect.
Step 3: Final Answer:
Option (B) is not a characteristic of Bearer Debentures.