Nishi Kanti Dey

 Profile Answers by Nishi Kanti Dey Questions by Nishi Kanti Dey

• Nov 6th, 2008

 

When the capital of the company is not sufficient to carry on business the company raise loan by issuing what is known as debenture, debenture holder money treated as a loan whereas preference shareholder money treated as a capital of the company. Debenture holder is not a properitor of the company, in the contest preference share holder is a properitor of the company. Preference share holder has a right to get bonus or dividend from the company but debenture holder has no right to get dividend.

GnanPra

 Profile Answers by GnanPra 

• Dec 19th, 2008

 

The difference between Debentures and Preferential Shares is as follows:
1) Person holding debentures has owed money to a company, while Preferential
Shareholder could be considered as a partial owner of the company.
2) A Preference shareholder has a right towards the profits of the company – In
a way of Dividends.
3) A Preference shareholder earns dividends if the company is making profits,
however a Debenture holder needs to be paid irrespective of making profits or
losses.
4) A Debenture holder would be paid the capital invested at the end of a
stipulated term. A preference shareholder is not promised return of capital
invested; instead he earns dividends till the time the company exists and is
profitable.
5) A debenture holder earns interest on the capital invested till
the capital is not returned, while a preference shareholder is paid dividends
till the time the company exists.