What are the major differences between debentures and shares?

The major differences between debentures and shares (1) Rights the Debentures constitute loan and only a creditor of the company. The shares represents a part of the share capital of the capital. (2) Approval in debentures question of getting approval for payment of interest does not arise. In shares, Dividend is payable only when it is recommended by the Board and approved by the general meeting of the shareholders. (3) Liability in the debentures is not having such liability. In share sholder’s liability is limited to the unpaid amount of the shares. (4) Return of Capital in debentures are redeemable either at a fixed date or at the option of the company during the lifetime itself. In shares are non-repayable during the lifetime of the company except in the case of redeemable preference shares. (5) Charge on Assets in the Debentures are generally secured and shares have no charge on the assets of the company.


Malathi Murali