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: \[ \text{Transfer} \rightarrow \text{By mere delivery} \] \[ \text{Ownership} \rightarrow \text{By possession} \] No transfer deed is required.

Answer 1

The Correct Option is B

Concept: Bearer debentures are debentures payable to the bearer (holder) of the certificate. Ownership is determined simply by possession of the instrument. Important characteristics of bearer debentures include:
• They are negotiable instruments.
• They are transferable by mere delivery.
• Interest is paid to the holder without verification of identity. No formal deed of transfer is required.

Step 1: Analyze option (A).
Bearer debentures are treated as negotiable instruments. \[ \Rightarrow \text{Correct characteristic} \]

Step 2: Analyze option (B).
A deed of transfer is generally required for registered debentures, not bearer debentures. Bearer debentures are transferred simply by delivery. \[ \Rightarrow \text{Not a characteristic} \]

Step 3: Analyze option (C).
Bearer debentures can be transferred by: \[ \text{Mere delivery} \] \[ \Rightarrow \text{Correct characteristic} \]

Step 4: Analyze option (D).
Interest is paid to the person holding the debenture certificate regardless of identity. \[ \Rightarrow \text{Correct characteristic} \]

Step 5: Identify the correct option.
The statement that is not a characteristic of bearer debentures is: \[ \boxed{\text{Their transfer requires a deed of transfer}} \] Hence, the correct answer is: \[ \boxed{(B)} \]