DEBEN'TURE (ME. debontitr, from Lat. de Guntur there are owing to me, a phrase which receipts began, from richer,', tow). In the most general sense, a written acknowledg ment of indebtedness, The term has long been in use in England to describe various classes of Government obligations, as soldiers' debentures, exchequer debentures, and custom-house deben tures, and it is employed in the same sense in the United States (F, S. Rev. Stat., :S,§3037 3040). Of late years the term debenture has come into common use. especially in England, to designate company securities of all sorts. in eluding the corporate bonds, which, in the United States, comprehend the greater part of such obligations. They need not be bonds, however, though they are usually of that character: and neither is it necessary, to give them the char acter of debentures, that they shall be issued by corporations, though most of them doubtless are. They may or may not be secured by mortgage or other charge on the property of the company or individual issuing them. They differ from eer titicates of stock, in that they eontain a promise, usually in the form of a covenant, to pay a principal sum, with periodical interest thereon, on a specified date in the future, and they are usually issued in series, and for the purpose of borrowing money thereon. They are eommonly transferable, and, it is said. may be so drawn as to be negotiable.
When, as usually is the ease, debentures are secured by a charge on the property of the com pany issuing them, the charge is in the form of a 'floating security,' as it is called, attaching at any given moment during the life of the deben ture to all the property owned by the company at that time. The dissolution of the company causes the debentures to mature, even though the time for which they were given has not ex pired, and the floating security thereupon be comes fixed and definite. and the property may be readied by the debenture-holders in an action for the appointment of a receiver and the en forcement of the security. From this it is evi dent that such debentures depend for their se ent•ty upon the condition of the company, and may readily bevome worthless or nearly so.
The matter of issuing debentures and the na ture of the security which they afford are largely regulated by general statutes providing for the incorporation of companies and sometimes by private nets for the government of individual corporations. Consult: Palmer, Company Prece dents (6t11 or later ed.. London, 1895) : Manson, The Debentures and Debenture Stork of Trading and Other Companies (London. 1894); Jones, Treatise on the Lair of Corporate Bonds and .11m.lynyes 12d ed.. Boston, 1894). See BONA; CORPORATION SECURITY.