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Legal Terms - Debenture: A formal instrument acknowledging and outlining the conditions of a loan, usually given to a business. An unsecured loan (a naked debenture) is a possibility. The debenture will typically, however, be subject to a *charge and include the terms of the charge (such as the authority to designate a *receiver or a *crystallization event). To raise money for a project, debentures may be issued in series to several creditors or to a single creditor. If the former, a trust in favor of those creditors may be established and included in the debenture. This makes it possible for the business to designate a trustee for holders of debentures, guaranteeing that the business's financial operations are run in the group of creditors' best interests. *Loan capital is the term for the funds raised through the issuance of debentures. Comparatively speaking, share *capital is held by *company members.
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