Differences between shares and debentures

  • Shareholders are effectively owners; debenture-holders are creditors.
  • Shareholders may vote at AGMs and be elected as directors; debenture-holders may not vote at AGMs or be elected as directors.
  • Shareholders receive profit in the form of dividends; debenture-holders receive a fixed rate of interest.
  • If there is no profit, the shareholder does not receive a dividend; interest is paid to debenture-holders regardless of whether or not a profit has been made.
  • In case of dissolution of firms debenture holders are paid first as compared to shareholder.

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