What is meant by redemption of debentures?
Redemption of debentures refers to extinguishing or discharging the liability on account of debentures in accordance with the terms of issue. In other words, it means the repayment of the amount of debentures by the company to the debentureholders.
There are four main ways by which debentures can be redeemed. These include payment in lump sum at maturity, payment in instalments drawn by lots, purchase in the open market for cancellation, and conversion into shares or new debentures.
Explanation
The answer is derived directly from Section 2.11 of the provided text, which defines redemption and lists the four methods. The definition focuses on the discharge of liability and repayment. The second paragraph lists the methods (lump sum, instalments, open market, conversion) to provide a comprehensive answer suitable for 3 marks.