A company needs funds for extension and development purpose without increasing its share capital, it can borrow from the general public by issuing certificates for a fixed period of time and at a fixed rate of interest. Such a loan certificate is called a debenture.

According to section 45 of the companies Act, 2013 each share of the share capital of the company shall be distinguished with a distant number for its individual identification. However, such distinction shall not be required, if the shares are held by a person whose name is entered as holder of beneficial internet as per the records of a company.

Right shares are the shares which are issued by the company, with the aim of increasing the subscribed share capital of the company by further issue, if it is authorized by its Articles."The right shares are primarily issued to the existing equity shareholders through a letter of an issue, on pro rata basis.

Condition stipulated for capital subscription
(i) The fulfilling formalities to raise necessary capital.
(ii) Adhering to SEBI guidelines in this regard.
(iii) Fulfilling the condition for valid allotment by director.
(iv) Filing allotment return with the Registrar.

(i) When the share are issued at a price below the face value they are said to be issued at a discount.
(ii) For example, a share having the face value of Rs 10 is issued at Rs. 8.
(iii) The companies act 2013, prohibits the issue of shares at discount (section 53) except sweat Equity share.

When shares are issued at a price above the face or nominal value, they are said to be issued at a premium. For example, a share having the face value of Rs. 10 is issued at Rs.12. Here, Rs.2 is the premium. The amount of share premium has to betransferred to an account called the 'Securities Premium Account! This account is capital in nature and can only be utilized for the purposes specified by the Act.999
(i) To write off preliminary expenses.
(ii) To write off the expenses of issue, or commission paid, or. discount allowed, on issue of shares or debentures of the company.
(iii) To provide for the payment of premium on the redemption of any redeemable preference shares or debentures of the company.
Thus, securities premium is not available for distribution of dividend.

As per section 11 of the Act, a company having share capital should file with the Registrar, declaration stating that
(i) Every subscriber to the Memorandum has paid the value of shares agreed to be taken by him.
(ii) Paidup capital is not less than Rs.5 lakhs in the case of a public limited company and Rs.1 lakh in the case of private limited company.
(iii) It has filed the Registrar the verification of the registered office.
These restrictions in section 11 are applicable to companies having share capital. It can commence business only after fulfilling all the formalities mentioned above and exercise borrowing powers immediately after incorporation.

Debenture is a document issued by the company for acknowledging the loan from the public.Debentures are generally classified into different categories on the basis of :
(i) Convertibility ofthe Instrument
(ii) Sccurity of the Instrument
(iii) Redemption ability, and
(iv) Registration of Instrument.
(i) On the basis of convertibility :
(a) Non-convertible debentures : These instruments cannot be converted into equity shares.
(b) Partly convertible debentures : A part of these instruments are converted into equity shares.
(c) Fully convertible debentures : These are fully convertible into equity shares.
(d) Optionally convertibility debentures : The investor can have the option to either convert the debentures at a price decided by the issuer or agreed upon at the time of issue.
(ii) On the basis of security :
(a) Secured debentures : These instruments are secured by a charge on the fixed assets of the issuer company.
(b) Unsecured debentures : These instruments are unsecured against the assets.
(iii) On the basis Redeemability :
(a) Redeemable debentures : It refers to the debentures which will be redeemed in future.
(b) Irredeemable debentures : It is a debenture, in which no specific time is specified by the companies to pay back the money.
(iv) On the basis of Registration, debentures may be classified as:
(a) Registered debentures : These are ssued in the name of a particular person, who registered by the company.
(b) Bearer debentures : These are issued to the bearer and are negotiable. Instruments, and are transterred by mere delivery.