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This article will help you to differentiate between share and debenture of a company.
Difference # Share:
1. Nature:
It is a part of owned capital.
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2. Return:
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.
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4. Dividend or Interest:
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.
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6. Order of Repayment:
At the time of winding up, share capital is repayable after meeting all outside liabilities.
Difference # Debenture:
1. Nature:
It is an acknowledgement of a debt.
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2. Return:
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.
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4. Dividend or Interest:
A fixed rate of interest is paid on debentures irrespective of profits or otherwise of the company.
5. Redemption:
Debentures are usually redeemed.
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6. Order of Repayment:
At the time of winding up, debenture holders shall be entitled to get back their money in priority to the share-holders.