When corporations issue debentures to raise debt finance they may subsequently become holders of their own debentures either by repurchasing them or by taking them as security for loans advanced to third parties. In addition, if corporations are allowed to hold their own debentures there may be an opportunity to offer them as security. This paper examines the effectiveness of such transactions. The focus is on the effect of common law principles and the application of s 1051 of the Corporations Law. This section allows corporations to redeem their debentures and to re-issue them without it being regarded as an issue of new debentures.