|
Sr. |
Basis |
Shares |
Debentures |
|
1 |
Ownership | Shareholders are the owner of the company. | Debentures holders are creditors. |
|
2 |
Part of capital | Shares are a part of the capital of the company. | Debenture constitutes a loan. |
|
3 |
Voting right | Shareholder generally enjoys the voting right. | Debenture holders do not have voting right. |
|
4 |
Charge | Shaers do no carry any charge. | Debentures have a charge on the assets of the company. |
|
5 |
Interest or dividend | Dividend can be paid to shareholders only out of the profits of the company. | Interest on debenture is to be paid out even if there is no profit. |
|
6 |
Rate of dividend | On equity shares the dividend may vary from year to year. | The rate of dividend is fixed in case of debentures. |
|
7 |
Priority | In the event of liquidation of the company the shareholders are payable at the last. | Debentures get priority over the shares. |
Distinction between a share and a debenture
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