Shares
v Share is a subdivision of the capital of the company
v Each share has a distinct number
v Each share is given a face value which is paid by the shareholder
v There are two main types of shares
Difference between Preference Shares and Ordinary Shares
Preference Shares | Ordinary Shares |
v Dividend is paid first v At the time of winding up, share capital will be returned before that of ordinary shares v It gets a fixed rate of dividend v It gives no voting right | v Dividend is paid last v At the time of winding up, share capital will be returned after that of preference shares v No fixed rate of dividend v It gives voting right |
Debentures
Debenture is a document which acknowledges a loan to the company. It is a part of the loan capital of the company. Debenture carries a fixed rate of interest which must be paid whether the company makes profit or not.
Difference between Shares and Debentures
Shares | Debentures |
v Shareholders are owners of the company v Ordinary shareholders get no fixed rate v Its reward is based on company profits v Ordinary shareholders have voting rights | v Debenture holders are not the owners v It carries a fixed rate of interest v It is paid irrespective of profitability v Debenture holders have no voting right |
Post a Comment