Question

Differences between debentures and shares

Answer 1

$\huge{ \underline{ \overline{ \mid{ \mathfrak{ \purple{ \: \: ANSWER \: \: } \mid}}}}}$

$\text{ \underline{ \: Difference between debentures and shares are :- \: }} \\ \\ \text{1. Debentures are the part of loan capital.} \\ \: \: \: \: \: \: \: \: \: \: \text{Whereas, shares are the part of owned capital.} \\ \\ \text{2. There is not restriction on the issude of debentures} \\ \text{ at a discount.} \\ \: \: \: \: \: \: \: \: \: \: \: \text{But, shares, exceot sweat equity shares cannot} \\ \text{ be issued at a discount u/s 53 of the Companies} \\ \text{ Act, 2013.} \\ \\ \text{3. Debentureholders are the creditors of the company.} \\ \text{They donot have voting right.} \\ \: \: \: \: \: \: \: \: \: \: \: \text{On the othet hand, shares are the source of } \\ \text{membership and voting right in the General meeting }\\ \text{of the company.} \\ \\ \text{4. Sometimes, debentures are issued on the mortgage } \\ \text{of some property. Hence, the debenture may be} \\ \text{ secured.} \\ \: \: \: \: \: \: \: \: \: \: \: \text{But, shares are the part of capital. So, these} \\ \text {donot \: have any security.} \\ \\ \text{5. Normally, debentures are repaid during the life } \\ \text{time of the company.} \\ \: \: \: \: \: \: \: \: \: \text{ Whereas, shares continue during the} \\ \text{ complete life time of the company.}$