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 are to be 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.

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