Question

Write the difference between Debentures and Shares:

Answer 1

Basis of difference	Debentures	Shares
Constitute	Debentures constitute a Loan.	Shares are part of the capital of a company.
Assets – Charge	Debentures have a charge [security] on the Assets of the company	Shares do not carry such a charge.
Rate of Interest	Gets Fixed Rate of interest	Gets a Variable rate of dividend.
Level	Lower and Middle level	Top-level
Interest paid	Interest is a business expenditure allowable deduction from profit.	The dividend is not an allowable deduction as business expenditure.
Voting	Not having voting right	Having voting rights.
Even out of Capital	Interest is to be payable if there is no profit.	[To be paid from capital] Dividend can be paid only out of profits and not otherwise.