What is a debenture?

Updated October 2026

In UK company lending a debenture is the written instrument under which a company grants a lender security over its assets. It usually contains two kinds of charge: a fixed charge over the assets that can be identified and held still, such as property, plant and sometimes book debts, and a floating charge over the assets that change from day to day, such as stock, cash and receivables. The Companies Act 2006, section 738, defines the word widely, to include debenture stock, bonds and any other securities of a company, whether or not they constitute a charge on its assets; in practice, when a lender asks a limited company for "a debenture", it means this security document.

A debenture is registered at Companies House, sits on the public record, and decides who is paid first if the company fails. It is the standard security behind a bank term loan or overdraft and behind most secured lending to a limited company or LLP, and it is separate from a personal guarantee, which is a promise by a director rather than a charge over the company.

What a debenture contains

The fixed charge attaches to specific assets at the moment the debenture is signed. The company cannot sell or charge those assets without the lender’s consent, and on a default the lender can take and sell them. Land, buildings, fixed plant, intellectual property and shares in subsidiaries are fixed-charge assets; a charge over book debts is treated as fixed only where the lender genuinely controls the proceeds, which is why the account the debts are paid into matters.

The floating charge hovers over a class of assets rather than any one item, so the company goes on buying and selling stock, collecting debts and paying suppliers in the ordinary course of business. On a specified event, such as a default, the appointment of an administrator or the lender giving notice, the floating charge crystallises and becomes fixed over whatever assets are in the class at that moment.

A debenture also contains the covenants the company gives: to insure the assets, to keep accounts, to deliver financial information, not to grant other security without consent (a negative pledge), and the events that let the lender demand repayment and enforce.

Registration at Companies House

A charge created by a company must be delivered to Companies House for registration within 21 days beginning with the day after it is created (Companies Act 2006, section 859A). The register then shows the charge, the chargee and a certified copy of the instrument, which is why a lender reads the company’s Companies House file before offering anything: every existing debenture, legal charge and chattel mortgage is listed there.

A charge not registered in time is void against a liquidator, an administrator and any creditor of the company (section 859H), so the lender’s solicitors file promptly and the loan is normally not drawn until the filing is in hand. When the debt is repaid the lender files a statement of satisfaction and the charge is marked satisfied on the register, though the entry itself remains visible.

Why only one lender holds the first floating charge

Charges rank in order of creation unless the lenders agree otherwise, so the first debenture ranks first. A second lender can take a second-ranking debenture, but only behind the first, and usually only with the first lender’s consent where the first debenture contains a negative pledge. In practice the holder of the first floating charge over the whole business is the lender every later lender has to ask, which is why a term lender, an invoice financier or an asset lender will always ask whether a bank already holds a debenture and what it covers.

Where two lenders need to share security, a deed of priority or an intercreditor agreement sets out who ranks ahead for which assets: an invoice financier might take first ranking over the book debts and the bank first ranking over everything else.

What happens on enforcement

The holder of a qualifying floating charge, one that covers the whole or substantially the whole of the company’s property, can appoint an administrator out of court under paragraph 14 of Schedule B1 to the Insolvency Act 1986. The administrator takes control of the company, and the lender is paid from the assets its charges cover, in the order the law sets: fixed-charge assets go first to the fixed-charge holder; floating-charge realisations go first to the costs of the administration and the preferential creditors, then a prescribed part is set aside for unsecured creditors, and the rest goes to the floating-charge holder.

The prescribed part under section 176A of the Insolvency Act 1986 is 50% of the first £10,000 of floating-charge realisations and 20% of the remainder, capped at £800,000 for charges created on or after 6 April 2020, so a floating-charge lender never receives the whole of what its floating charge covers. That arithmetic is one reason lenders price fixed security and floating security differently.

A debenture is not a personal guarantee

The debenture binds the company and its assets. A personal guarantee binds a director personally and is not registered anywhere. A lender to a limited company commonly asks for both: the debenture to reach the company’s assets ahead of other creditors, and the guarantee to reach the director if the assets fall short. The personal guarantee page explains the guarantee; the secured business loans page explains the other forms of security.

What to check before signing one

Which assets fall under the fixed charge, because those cannot be sold or refinanced without consent. Whether book debts are fixed or floating, because that decides whether an invoice finance facility is possible later. What the negative pledge forbids. What events of default the lender can act on. And whether the debenture is "all monies", securing everything the company ever owes that lender, or limited to one facility. Each lender publishes its own standard form, and a company’s solicitor should read it before the board signs.

We work with UK limited companies and LLPs only, for business and commercial purposes. Enquiring does not affect your credit score. If you apply to a lender, it runs its own credit search, which may be recorded on your file.

Frequently asked questions

Does every business loan need a debenture?

No. An unsecured business loan is lent without one, on the accounts, the bank statements and the directors’ guarantees. A debenture comes with secured lending: bank term loans and overdrafts, asset-based lending, and most larger facilities to a limited company. Each lender publishes whether it takes one.

Can a company have more than one debenture?

Yes, ranking in order of creation unless a deed of priority says otherwise, and usually only with the earlier lender’s consent. Lenders commonly share security by asset class: one taking first ranking over book debts, another over everything else.

How do I find out whether my company has a debenture?

Search the company on the Companies House register and open the charges tab. Every registered charge is listed with the lender, the date created, whether it is outstanding or satisfied, and a copy of the instrument.

What is the difference between a debenture and a legal charge?

A legal charge is security over one property, registered at the Land Registry and at Companies House. A debenture is security over the company’s assets as a whole, through fixed and floating charges, registered at Companies House. A property-owning company borrowing on its building commonly grants both.

Is CapExpand regulated?

CapExpand Ltd (FRN 1060885) is a credit broker and an Appointed Representative of White Rose Finance Group Limited (FRN 630772), which is directly authorised and regulated by the Financial Conduct Authority. We are a broker, not a lender. We work with UK limited companies and LLPs only, for business and commercial purposes. If you have a complaint, our complaints page explains how it is handled.

How is CapExpand paid?

We will receive commission from lenders. On some cases we also charge a fee, which we set out in writing and agree with you before you proceed.

Borrowing against the company

If a lender has asked for a debenture, or you want to know what security a facility would need, the amount and the purpose are enough for us to check the case against lenders’ published criteria.

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Sources

Checked 26 October 2026 against the legislation as published on legislation.gov.uk. This page explains the law in general terms and is not legal advice; a company's solicitor advises on a particular debenture.