The upcoming discussion will update you about the difference between shares and debentures.
Difference # Shares:
1. Shares denote the owned capital of a Company.
2. A shareholder is a part proprietor of a Company.
3. A shareholder gets dividend, which shall be payable out of undistributed profits.
4. A shareholder cannot receive any dividend unless the Company makes a profit.
5. A shareholder can exercise voting rights on the strength of holding shares.
6. The money paid on shares is not refundable, except in case of Redeemable Preference Shares.
7. Shares can be issued at a discount subject to certain conditions contained in the Companies Act.
8. There is no question of creating any charge on the assets of the company for the issue of shares.
Difference # Debentures:
1. Debentures constitute borrowed funds of a Company.
2. A debenture holder is a creditor to the Company either secured or unsecured.
3. A debenture holder gets interest irrespective of the annual profits.
4. A debenture holder is entitled to the promised interest whether the Company makes a profit or not.
5. Debenture holders have no such rights.
6. Debentures are redeemable in nature and holder can get back the amount after the stipulated period.
7. There are no legal restrictions on the terms of the issue of Debentures.
8. The Debentures are generally secured by creating a charge on the assets of the Company.