Convertible debentures:Convertible debentures are long-term debt instruments issued by a company that can be converted into equity shares of the company on a future date. They can be fully, partially, or optionally convertible. They pay a lower coupon rate (interest) than pure debt instruments. A debenture holder is a creditor or lender of the company. Investors benefit from interest payment and have the option to convert the loan into equity to participate in the growth of the company. Therefore, Convertible debentures are those on which Equity shares may be exchanged at the option of the debenture holders. The debenture holders can approach the tribunals and seek relief if the company defaults in paying the interest on its due date or fails to repay the entire amount. They can redeem their amount with the assistance of the courts.