- They are not popular among investors hence the company is not sure of raising adequate capital
- Debentures holders earn a fixed rate of interest regardless of the profits made by the company.
- They attract high interest making them an expensive source of finance.
- Some are redeemable which can inconvenience the company as it refunds the capital.
- Some are secured against the assets of the company which can easily be lost incase of inability to pay.
- Debenture holders can sue the company if not paid their interest leading to liquidation of the company.
- Debentures holders do not participate in decision making hence they do not assist the company (in decision making) no matter how good they may be.
Kavungya answered the question on September 27, 2019 at 08:45
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