debentures may be classified as (A) A Registered Debentures: Registered debentures are issued in the name of a particular person, whose name appears on the debenture certificate and who is registered by the company as holder on the Register of debenture holders. (B) Bearer debentures: Bearer debentures on the other hand, are issued to bearer, and are negotiable instruments, and so transferable by mere delivery like share warrants. 12th Commerce Unit - - . .
PM S. No DEBENTURES SHARES . Debentures constitute a loan. Shares are part of the capital of a company.
. Middle and Lower Level Top level . Debenture holder gets fixed rate of Interest which carries a priorities over dividend. Shareholders gets dividends with a varying rate.
. Debentures generally have a charge on the assets of the company. Shares do not carry any such charge. .
Debentures can be issued at a discount without restrictions. Shares cannot be issued at a discount. . The rate of interest is fixed in the case of debentures Whereas on equity shares, the dividend varies from year to year depending upon the profit of the company and the Board of directors decision to declare dividends or not.
. Debenture holders do not have any voting right Shareholders enjoy voting right. . Interest on debenture is payable even if there are no profits i.e.
even out of capital. Dividend can be paid to shareholders only out of the profits of the company and not otherwise. . Interest paid on debenture is a business expenditure and allowable deduction from profits.
Dividend is not allowable deduction as business expenditure. . Return of allotment is not required for allotment of debentures. Return of allotment in e-Form No.
is to be filed for allotment of shares.