II.   Instruments & Transactions

A Debenture is a formal Instrument issued under the Corporate Securities standards of instruments and writing first formed under the Westminster laws of Great Britain from the 17th Century as a form of Certificate or Bond that certifies an amount of money owed as proof of a valid debt, secured only by the general faith and credit of the Estate or Corporation or Fund and promise to pay of the issuer.

The word Debeture is derived from the Latin debentur meaning “there are owing”, from debeo “to owe”.

There are three primary types of Debentures being Sinking Fund, Mortgage and Convertible:

(i) Sinking Fund Debentures being a Debenture secured by periodic payments into the Sinking Fund as invented in 1714 (3 Geo. 1. c.7); and

(ii) Mortgage Debentures being a Debenture secured by periodic payments into a collection of registered Mortgages as first invented in 1865 (28&29 Vict. c. 78); and

(iii) Convertible Debenture being a Debenture as a Bond holding a maturity of 10 years or greater that may be converted into a specific number of shares of common stock in the issuing company first invented in the 1860’s.

In terms of Debentures and Statute Law:

(i) The first mention of Debentures in Statute is in 1660 through 12 Car.2. c.8 in relation to subsidies and the creation of specific bills for soldiers to be able to charge the exchequer of the government for the payment and discharge of their creditors or his assigns the sum due upon the auditing of the account of his arrears; and

(ii) In 1701, an act by Queen Anne (1 Ann. S.1.c.21 §32) introduced the use of Debentures as the means by which merchants could charge the Exchequer to redeem the drawback of duties upon the exportation of those goods which were before imported; and

(iii) In 1714, an act by King George I (3 Geo. 1. c.7) introduced a yearly fund called the “Sinking Fund” as a means of redemptions and paypacks concerning duties and funding short falls as well as the charging of the Court of Exchequer for army debentures; and

(iv) In 1726, an act by King George I (13 Geo. 1. c.3) extended the yearly fund called the “Sinking Fund” as a means of redemptions and paypacks concerning duties and funding short falls as well as the charging of the Court of Exchequer for army debentures and the discharge of national debts; and

(v) In 1727, Debentures were then extended to the payment of the Kings Servants for the payment of their wages and then extended again to custom house Debentures; and

(vi) By 1749, an act by King George 2nd (22Geo2. c.23) extended the use of Debentures to the Admiralty in the payment of seamen and arrears to creditors; and

(vii) In 1753, an act by King George 2nd (26Geo2. c.15) introduced the notion that if Debentures were not claimed for 6 months or more, then an interest of 3 per cent per annum could be charged; and

(viii) In the 19th Century, Debentures were recognized as a form for substantial companies and government agencies to borrow money such as the Land Debentures (Ireland) Act 1865 c. 101, Mortgage Debenture Act 1865 (28&29 Vict. c. 78), County Debentures Act 1873 c. 35 and East India Loan (East Indian Railway Debentures) Act 1880 c. 10.