Why preferance share and debentures can be used to meet both the long- term and medium term financial needs....???? Also explain what is debenture....??!
Preference shares:?These types of shares provide the shareholders a preferential right regarding the repayment of capital and payment of earnings after a certain specified period of time. Such repayment to the preference share holders is made in accordance with the terms specified in Section 80 of the Companies Act, 1956.
Debentures:?Debentures are financial instruments used by companies to raise long-term debt capital. They imply that a company has borrowed a certain sum of money which it will repay later to the debenture holders. Just like loans, they carry a fixed rate of return and specify in advance the time for repayment of the debts.
Debenture is an acknowledgement that the company has borrowed some amount of money which it promise to repay in future.
Debentures:?Debentures are financial instruments used by companies to raise long-term debt capital. They imply that a company has borrowed a certain sum of money which it will repay later to the debenture holders. Just like loans, they carry a fixed rate of return and specify in advance the time for repayment of the debts.
Debenture is an acknowledgement that the company has borrowed some amount of money which it promise to repay in future.