Running a business takes money, and one way companies in Ghana can raise money is through something called a debenture. Sounds fancy? Don’t worry, it’s just a formal promise that a company makes when it borrows money from someone, usually with clear terms on when and how they’ll pay it back (plus interest).
Who Can Give a Debenture?
Only companies, not individuals, can issue debentures. Think of it as a company saying, “Hey, we need money, and we’ll pay you back under these conditions.” They offer this to investors, banks, or institutions to raise capital.
Different Types of Debentures (Like Loan Flavours)
1. Secured vs. Unsecured
- Secured Debenture: The company offers one of its assets (like land, buildings, or vehicles) as a backup in case they can’t pay. It’s like saying, “If we can’t pay, take this.”
- Unsecured Debenture: No backup or security. It’s a riskier loan, so it might come with higher interest.
2. Convertible vs. Non-Convertible
- Convertible: This loan can later be turned into company shares (ownership).
- Non-Convertible: This stays as a loan, you just get your money back, not shares.
3. Redeemable vs. Non-Redeemable
- Redeemable: The company can choose to buy back the debenture later.
- Non-Redeemable: The loan stays until it’s paid off completely.
What’s a Charge (And Why Should You Care)?
A charge is how companies promise security to the lender.
- Fixed Charge: Tied to a specific asset (like a building). The company can’t sell or mess with it without permission.
- Floating Charge: Tied to assets that change often (like stock or inventory). The company can still use or move them until they default.
What Happens If the Company Doesn’t Pay?
If the company can’t pay the loan back, the lender (a.k.a. debenture holder) can enforce the charge. They might bring in a receiver, someone who takes over and may choose to manage the affairs of the company or sell the company’s assets to recover the money.
The Bottom Line
Debentures are a big deal in Ghana’s business world. They help companies grow, but they come with responsibilities. If you’re a business owner or investor, know your rights, know your risks and make sure you understand the fine print.
