Convertible Debentures Law and Legal Definition

Convertible debentures are debentures issued with the privilege of converting them into other forms of securities, usually the common stock of the issuing corporation. Such debentures gives choice to the lender to take stock or shares in the company, as an alternative to taking the repayment of a loan. Companies may use convertible debentures as a financing tool which allows them to raise capital without selling stock.