Difference between shares and debentures

samual

Active member
one of the main differences between the shares and debentures is
Ownership. The share of the company provides ownership to the shareholder ,debentures holders are creditors of a company who provides loan to the company.
Identity. person holding share is know as shareholder, while person holding debentures is know as bebentures holder.
Certainty of Return. No certain of return in case of loss for the shareholder while debentures holders receives the intrest even if there is no profit.
Convertibility. Share cannot be converted into debentures. But debentures can be converted into shares.
Control. Shareholder have the right to participate and vote in company's meeting. But debentures holders do not possess any voting right and cannot participate in meeting.
There can be mortgage debentures I.e asset of the company can be mortgage in favor of debentures holders. But there can be no mortgage shares. Asset of the company cannot be mortgage in favour of shareholder.
There is no restrictions on issue of debentures at a discount can be issue only after observing certain legal formalities
While second debentures. These debentures are redeemed after the redemption of first debentures.
Issue of debentures what do we know about that?
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Jasz

VIP Contributor
Share and debenture are two types of securities that are issued by a company. A share is a unit of equity ownership in the company while a debenture is a debt instrument that is secured against the assets of a company.

Shares: Shares give you an ownership stake in the company. In exchange for lending your money to the company, you receive an equity stake in the firm. You are entitled to a portion of any profits generated by the company, as well as any dividends paid out by the firm.

Debentures: Debentures are loans made to companies by investors who receive interest payments over time on their investments. Debentures can be secured or unsecured, depending on whether they are backed by collateral like real estate or other assets owned by the company being financed. A share is a security that represents an ownership interest in a corporation. A debenture is a debt instrument. The difference between the two is that shares are equity in a company, and debentures are debt.

Shares can be sold on the open market, but debentures can only be traded on the secondary market. Debentures are also often preferred by investors because they have fixed returns and maturities, whereas shares may not be as predictable.
 
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