The difference between Shares and Debentures is given below-

Basis of Difference




1. Owner or Creditor

Share holders are the owners since shares forms a are part of owned capital

Debenture holder are Creditors since debentures are a part of loan


2. Voting Rights

Share holders have the voting rights

Debenture holders do not have any voting rights.


3. Returns

Share holders are entitled for returns in the form of dividend.

Debenture holders are entitled for returns in the form of interest.


4. Rate of Return

The rate of dividend is not fixed and varies from year to year.

The rate of interest is fixed and do not vary from year to year.


5. Obligations of Return

Dividend is appropriation of profit. Dividend will not be paid if losses are incurred by the company

Interest is charged against profit, interest is payable even if there is no profit.



6. Repayment of Amount

The amount of share is not returned during the life time of the company

The amount of debenture is returned according to the term of issue.


7. Issue

The issue of shares at discount need adherence to the restrictions imposed by the Section 79 of the Company Act.

There are no such restrictions for issuing debentures a on discount.


8. Conversion

Shares cannot be converted into debentures.

Debentures can be converted into shares.


9. Risk

Shares are more risky than debenture as these are unsecured.

If debentures are secured against asset, the risk involved is the minimal.


10. Repayment Priority

Payment to the share holders is made after settlement of all external liabilities, i.e. after debenture holders.

Payment to the debenture holders is made before the share holders.

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SHARES:- shares is a part of capital. Share holders are the owners of the company. 2) Share holders get divident on profit . 3) The amout of share is not to be returned during the lifetime of the company. 4) Share cannot be converted into debenture . 5)  Share holder has the right to participate and vote in company's meeting.

DEBENTURE;- It is a part of loan . Debenture holders are the creditor of the company . 2) they get interest on holders 3) amount of debanture is to be returnde after a specific period of time 4) they can be converted into shares 5) debenture holders does not posses any voting right and cannot paricipate in meetings

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Borrowed Funds
money one has received from another party with the agreement that it will be repaid. Most borrowed funds are repaid with interest, meaning the borrowers pays a certain percentage of the principal amount to the lender as compensation for borrowing. Most borrowed funds also have a maturity date by which time the borrower must have repaid the loan. Borrowing and lending occur informally between family and friends, at the retail level through banks and on a large scale through governments and institutional invertment
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