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Difference between share and debenture - Class 11 PDF Download

Comparison between Share and Debenture:

 

Share

Debenture

Ownership

Provides ownership in the company

Does not provide ownership

Identity

Known as a shareholder

Known as a debenture holder

Returns

No certainty of returns. If company profits returns will be provided

Returns are a given. Even if company is suffering losses, it will provide a return

Convertibility

Cannot be converted into debentures

Can be converted into shares

Control

Right to participate and vote on the company’s decisions

No control or voting right provided

Losses

Will also shoulder the losses

Does not have to suffer any losses

In case of liquidation

No return on money

Debenture holders get priority in getting their money back

Issuance

Shares at discount can be issued only after observing certain legal formalities

No restriction on issue of debentures at a discount

Mortgage

Assets of the company cannot be mortgaged in favor of shareholders

Assets of the company can be mortgaged in favor of debenture holders

Interest

Not fixed, if profits are higher so is the dividend

Fixed interest rate

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