What do you mean by cancellation of debenture assuming that co. Have sufficient debenture redemption on reserve.
Debentures can be purchased from open market for teh following 2 purposes:
1. For the purpose of cancellation: When the company do not want to keep that debenture anymore then it may cancel that purchased debentures after passing necessary Board resolution by the directors to this effect.
2. For the purpose of investment: It is not necessary for a company to immediately cancel its own purchased debentures. When a company has surplus funds, instead of investing these fund in the securities of other companies, it buys its own debentures as investment.
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