A bearer debenture is transferable merely by delivery, similar to currency notes or bearer cheques.
In a bearer debenture, the holder's name is not registered in the company's books. The person who physically possesses (bears) the debenture is considered its owner. Transfer happens simply by handing over the debenture certificate from one person to another - no registration or documentation with the company is required.
This is different from:
- Registered debentures where the holder's name is recorded in the company's register and transfer requires formal registration with the company
- First debentures and Mortgage debentures which are classifications based on priority of charge and security respectively, not on the method of transfer
Since bearer debentures are transferable by simple delivery without any formalities, they are highly negotiable instruments and carry interest warrants that can also be encashed by the bearer.