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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › company law
Hi Mike!
What’s the difference between a loan and a debenture?
If a company goes to the bank for a loan, can we say that it is issuing a single debenture?
A debenture, by definition, is “the written acknowledgement of a debt, usually under seal”
I could lend you money but we neither of us feels it necessary to witness this loan by having it in writing (foolishly!)
So you see, we can have a loan that has been arranged simply by a conversation between the two of us
In the F4 exam, the examiner is more likely to ask about debentures (unsecured, secured by way of floating charge or secured by way of fixed charge)
OK?