In corporate finance, a debenture is a long-term debt issue used by large companies to borrow money, at a fixed rate of interest or also at a variable interest rate in part or in whole. The term "obligation" originally referred to a document that creates or recognizes a debt, but in some countries, the term is now used interchangeably with the term bonds "Bond (finance)"), securities loan or promissory notes. A debenture is like a loan certificate or a bond loan that evidences the fact that the company is responsible for the payment of a specified amount of interest and although the money raised by the debentures become a part of the capital structure of the company, it does not become equity capital. Large debentures receive payment before sub-obligations, and there are variations in the risk and return rates for these categories.

Obligations in general are freely transferable by the holder of the obligation. Bondholders do not have voting rights in the company or in the general meeting of shareholders, but may have separate meetings or votes. For example, when changing the rights inherent to obligations. The interest paid to them is a charge against the profit of the financial state in the company.

Bonds gave rise to the idea that the rich "clip their coupons," meaning that a bondholder would submit his "coupon" to the bank and receive a payment every quarter (or whatever period the contract specified).

There are also other features that minimize risk, such as a "sinking fund," which means the borrower must repay a portion of the bond's value after a specified period of time. This decreases the risk to creditors, as a hedge against inflation, bankruptcy, or other risk factors. A sinking fund that makes the bond less risky, and therefore gives you a small "coupon" (or interest payment). There are also options for "convertibility," meaning that a creditor can convert their bonds into shares in the company if they wish. Companies also reserve the right to call their bonds, which means they can be called before the expiration date. There is often a clause in the contract that allows, for example, if a bond issuer wants to buy back 30 years of 25-year bonds, they must pay a premium. If a bond is called, it means that less interest is paid.

Failure to pay a bond effectively means bankruptcy. Bondholders who have not received their interest can cause the company to go bankrupt, or seize its assets, if stipulated in the contract.