Debenture A long-term, financial debt instrument that is used to raise funds for capital assets such as school buildings and generally gives priority on the waiting list to a child who has passed the school's admission test and interview. Many are refundable when the child leaves the school. Some are transferable and can be sold on the second-hand market for more than their face value. Second-hand debentures have been sold via membership agencies for up to HK$3.7 million. There are various types of debenture, including:
Corporate debenture Bought by a company that is funding the education of an employee's child under their terms of employment or by individuals using a corporate vehicle to obtain an enrolment right. When the employee's child leaves the school, it can be reassigned to the child of another member of staff in the same company.
Individual debenture Bought by families seeking priority in admissions for their child over other children. Typically cheaper than corporate debentures.
Capital debenture A debenture that does not confer priority in admission and can be bought by both corporations and individuals at one price. It is not redeemable but is transferable. Holders may be exempt from paying the school's annual capital levy.
Depreciating debenture Depreciates annually in value by a given percentage over a set period, with the refund being reduced accordingly. If the child remains at the school until the end of the period, there is no refund.
Capital note Another name for debentures. Normally refundable when the child leaves the school, and some are also transferable and can be sold on the secondary market for more than the face value.
Annual capital levy An alternative to debentures that involves payment of a smaller, annual sum that is non-refundable and paid at the start of each school year. Does not confer priority in admissions.
General capital levy or nomination right A non-refundable, one-off lump-sum payment that is normally set at a lower rate than debentures and can help to secure a school place for a child.
Schools can have various combinations of the above.