Companies Act 2014 section 423

Perpetual debentures

Section 423 confirms that debentures are not rendered invalid merely because they are made irredeemable or redeemable only upon a remote contingency or after a very long period.

• A debenture may be structured so that it is never redeemable (a "perpetual" debenture), and this will not make it invalid.
• A debenture may also be made redeemable only on the happening of a specified event, no matter how unlikely or distant that event may be.
• Equally, a debenture that is redeemable only after the expiration of a very long time period remains legally valid.
• This provision overrides any old common law rule (known as the prohibition on a "clog on the equity of redemption") that might otherwise have struck down such conditions.