Question

On Bearer debentures, Interest is paid to a person who produces the ................... attached to such debentures?

• A. Registered Deed
• B. Ownership Papers
• C. Interest Coupon
• D. Interest Certificate

Hint:

Bearer debentures carry coupons. Interest is paid against the coupon.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Debentures can be registered or bearer. A registered debenture has the holder's name in the company books. A bearer debenture has no name and passes from hand to hand by delivery.

Step 2: Key Rule:
For a bearer debenture the company does not know who the holder is. So it attaches small slips called coupons to the debenture. The holder cuts off a coupon and presents it to claim interest.

Step 3: Check option (1).:
A registered deed is linked with registered debentures, where the name is recorded. So (1) is wrong.

Step 4: Check option (2).:
Ownership papers are not attached to a bearer debenture for interest. So (2) is wrong.

Step 5: Check option (3).:
The interest coupon is attached to the bearer debenture and is produced to get interest. So (3) is correct.

Step 6: Check option (4).:
An interest certificate is issued by a payer to show interest paid and tax deducted. It is not attached to a debenture. So (4) is wrong.

Final Answer:
Interest on bearer debentures is paid against the interest coupon, option (3). \[ \boxed{3} \]