Compare shares and debentures.

The major differences between shares and debentures are as follows −

  • Owned funds of the company.

  • Represents capital of the company.

  • Known as shareholders.

  • Will get dividends.

  • Deduction is not allowed.

  • No security for payments.

  • They have voting rights.

  • Can’t be converted to debentures.

  • No trust deed

  • Appropriation of profit.

  • High risk.

  • Don’t lien on asset of the company.

  • Don’t have leverage benefits.

  • Disclosed in balance sheet as equity and liabilities column.

  • Borrowed fund of the company.

  • Represents debt of the company.

  • Known as debenture holders.

  • Gets interest.

  • Deduction is allowed from profits.

  • Security for payment is there.

  • Can be converted into shares.

  • Charge against profit.

  • Trust deed is executed.

  • Most secured.

  • Have lien against assets of the company.

  • Have leverage benefit.

  • Not disclosed in balance sheet.

Updated on: 24-Jul-2020


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