Shares and Debentures
Shares and Debentures can be distinguished on these bases:
| Basis | Shares | Debentures |
| 1. Status | Shareholders are the real owners of the company. They provide ownership capital which is not refundable during the lifetime of the company. | Debenture holders are the creditors of the company. They provide loans generally for a fixed period, which the company has to paid back. |
| 2. Nature of return on investment | Shareholders get dividend that depend on the profit of the company. | Interest is paid on debentures at a fixed rate. Interest is payable even if the company is running at a loss. |
| 3. Rights | They have the right to vote and determine the policies of the company. | Debenture holders do not have the right to attend meetings of the company. So they have no say in the management of the company. |
| 4. Security | No security is required to issue shares. | Generally debentures are secured. So, sufficient fixed assets are required when debentures are to be issued. |
| 5. Order of repayment | Share capital is paid back only after paying the debenture holders and creditors. | Debenture holders have the priority of repayment over shareholders. |
| 6. Risk | Risk is high due to uncertainty of returns. | There is little risk due to certainty of return. |
Debentures Issued as Collateral Security
Debentures and Types of Debentures