Bring out the differences between shares and debentures

Hii,

Below points may give you the major difference between shares and debentures.

• The Shares are owned by the funds of the company whereas the debentures are the burrowed funds of the company
• The shares represent the capital of the company whereas the debentures represent the debt of the company.
• The one who holds the shares are known as share holders where as the one who holds the debentures are known as debenture holders.
• In the form of return the share gets the dividends whereas the debentures gets the interest.
• There is no security of payment in shares where as debentures have the security of payment.

Hope this will help you,

All the very best!!

Hello student,

It is one of the accountancy topics.

In the stock market, shares and debentures are familiar words when it comes to investment. In business, debt and equity are the two significant methods by which they raise money for the company’s expansion and growth.

A debenture is a debt tool used by a company that supports long term loans. Here, the fund is a borrowed capital, which makes the holder of debenture a creditor of the business. The debentures are both redeemable and unredeemable, freely transferable with a fixed interest rate. It is unsecured and sustained only by the issuer’s credibility.

Unlike shareholders, the debenture holders who are the creditor of the company do not hold any voting rights. The debentures are of following types:

• Secured Debentures
• Convertible Debentures
• Unsecured Debentures
• Registered Debentures
• Non-convertible Debentures
• Bearer Debentures

Whereas, a tiny part of a firm’s capital is identified as shares and is usually sold in the stock market to raise funds for a business. The price at which the investor buys the share is known as share price. The shareholders are qualified to receive the dividend as mentioned by an organisation because they are the owner of a portion of share iv the company.

The shares are transferrable/movable and are broadly categorized into two different sections.

• Equity share
• Preference share

Hope it helps