Differences between shares and debentures

Differences between shares and debentures

Debenture certificate. Image credit catawiki.com

Debenture certificate. Image credit catawiki.com

ZIMSEC O Level Commerce Notes: Differences between shares and debentures

SharesDebentures
Capital contributed by shareholdersLoan capital
Shareholders are owners of the companyDebenture holders are creditors to the company
Dividends may fluctuate e.g. Ordinary share dividendsInterest is fixed
Earn dividendsEarn interest
Dividends are only paid when a profit has been madeInterest is paid whether or not profit has been made
Are not attached or secured against company assetsCan be secured against company assets.
Can be ordinary or preference sharesCan be mortgaged or naked.
Are a risky form of investmentAre a more secure form of investment
Cannot force a company into liquidationCan force a company into liquidation
Ordinary shares have voting rightsAll debentures have no voting rights.

To access more topics go to the Commerce Notes page.

By |2018-07-23T11:29:35+00:00August 3rd, 2015|Notes, O Level Commerce Notes, Ordinary Level Notes, Principles of Accounts Notes|Comments Off on Differences between shares and debentures

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He holds an Honours in Accountancy degree from the University of Zimbabwe. He is passionate about technology and its practical application in today's world.
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