|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 are to be paid back.|
|2. Nature of
|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
|5. Order of
|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.|
Shares and Debentures-Difference
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