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Difference between shareholder and debenture

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SEE VIDEO BY TOPIC: Difference Between Shares and Debentures

Shareholders Vs. Debentures Holders

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Shareholders and debenture holders as the two terms relate refer to individuals holding shares and debentures respectively. Both the shareholders and debenture holders are different in several perspectives but the major difference is in their relationship with the company.

Shareholder is a joint-owner or proprietor of the company whereas debenture-holder is the creditor of the company. Some other significant differences are listed in the tabular form :. For Quick Alerts. Subscribe Now. For Daily Alerts. Pfizer hits week high on board nod for interim dividend. What are the rights of a shareholder?

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However, you can change your cookie settings at any time. Learn more. Change Settings Continue. Board of directors representative of the shareholders control and regulate company affairs. Shareholders being the joint-owners of the company are invited to attend AGM. Also they possess the right to vote. Interest is payable fixed rate irrespective of profit-earned or not.

Often, from capital in case of the latter. Conversion of debenture to equity is possible. Convertible debentures that can be converted into equity at the discretion of the holder can be issued.

Being secured creditors, debenture holders are paid- off first in the event of company liquidation.

Difference Between Shares and Debentures

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The key difference between Shares vs Debentures is that Shares are the capital that is owned by the shareholders in the company that gives the right to vote in the matters of the company and the right to claim their share in the profits of the company, whereas, debentures are the debt instruments secured in nature issued by the company for raising funds having fixed rate of interest with cumulative and non-cumulative features redeemable after fixed interval either in installment or in lump sum. The corporate world has its own set of capital structure.

A debenture is a medium to long term debt instrument for a company, which is used to raise capital from the investors, at a fixed rate of interest. These are mostly repayable on a fixed date. When a portion of the capital is raised through the general public by way of a primary capital market it is termed share capital of the company. A share is an indivisible unit of capital, thereby giving ownership to the shareholder and creating an ownership relationship between the company and the shareholder. Below is the top 13 difference between Shares vs Debentures.

Difference between Shares and Debentures

Post a Comment. According to professor L. B Grower, There are two classes of Company's securities, first class is described as shares and second as debentures. Share and debenture holders both invest their money into the company and both get returns on their investment. Debenture holders. The shareholders have the right to control and interference in the company's affairs. Like shareholder, the debenture holders have no control in the company's affairs. The shareholders are entitled to get dividends only out of profit.

Difference between shareholders and debenture-holders

A shareholder or member is joint owner of the company; but a debenture-holder is only a creditor of the company. A shareholder has a voting right whereas a debenture-holder has no such right at the meeting of the company. Section of the companies act prohibits the issue of debentures carrying any kind of voting rights at general meeting of the company. Interest on debentures is payable whether there are profits or not.

There are also preference shares that are different than common shares. There are several differences between a preference share and a debenture.

Shareholders and debenture holders as the two terms relate refer to individuals holding shares and debentures respectively. Both the shareholders and debenture holders are different in several perspectives but the major difference is in their relationship with the company. Shareholder is a joint-owner or proprietor of the company whereas debenture-holder is the creditor of the company. Some other significant differences are listed in the tabular form :.

What is the difference between shareholder and debenture-holder of a company?

I'm very much impressed with your blog details and wish further add-on to this knowledge by giving our own blog link describing the very details of the difference between shares and debentures. Get yourself acquainted with the fine knowledge on the topic and more. Monday, September 13, Distinguish between shareholder and debenture holders.

Preference shares—also referred to as preferred shares—are an equity instrument known for giving owners preferential rights in the event of a dividend payment or liquidation by the underlying company. A debenture is a debt security issued by a corporation or government entity that is not secured by an asset. Like common stock , preference shares represent ownership in a company. Unlike common stock, preference shares usually do not carry any voting power but give the holder of the preference shares claim on a specific quarterly dividend amount and precedence over common stock in the event of a company liquidation. Preference shares are an optimal alternative for risk-averse equity investors. They fall between common equity and corporate bonds on the risk spectrum.

Shares vs Debentures

Nowadays, investment in shares and debentures has taken a dominant position in the society, as people of different ages, religion, sex, and race invest their hard earned money, with an aim of getting better returns. While Shares refers to the share capital of the company. It describes the right of the holder to the specified amount of the share capital of the company. Conversely, debenture implies a long term instrument showing the debt of the company towards the external party. It yields a definite rate of interest, issued by the company, may or may not be secured against assets, i. So, if you are going to invest in any of the two securities, you should first understand their meaning. In this article, we have provided the difference between shares and debentures in tabular form. The debentures are the borrowed funds of the company.

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