This article will help you to learn about the difference between the share and debenture of a company.
1. Nature:
It is a part of owned capital.
2. Return:
ADVERTISEMENTS:
Shareholders are paid ‘dividend’ on the shares held by them.
3. Voting Right:
Shareholders have voting rights. They have control over the management of the company.
4. Dividend or Interest:
ADVERTISEMENTS:
The Rate of dividend depends upon the amount of divisible profits.
5. Redemption:
Shares are not redeemable (except redeemable preference shares) during the life-time of company.
6. Order of Repayment:
ADVERTISEMENTS:
At the time of winding up, share capital is repayable after meeting all outside liabilities.
Debenture
1. Nature:
It is an acknowledgement of a debt.
2. Return:
ADVERTISEMENTS:
Debenture holders are paid ‘interest’ on debentures.
3. Voting Right:
Having no right of voting debenture holders have no say in the management of the company.
4. Dividend or Interest:
ADVERTISEMENTS:
A fixed rate of interest is paid on debentures irrespective of profits or otherwise of the company.
5. Redemption:
Debentures are usually redeemed.
6. Order of Repayment:
ADVERTISEMENTS:
At the time of winding up, debenture holders shall be entitled to get back their money in priority to the share-holders.