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Difference between preference share and debentures …

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Difference between preference share and debentures share
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Sia ? 4 years, 6 months ago

Basis of Difference Debenture Preferences Share
Meaning The Debenture is the type of loan or debt instrument which is issued in the market to subscribe to the public. The shares capital which is carrying a fixed rate of dividends and preference to repayment known as preference shares.
Types It is a type of loan.  It is a type of Capital. 
Rate of Return It has a fixed rate of Return which is known as Interest. It has a fixed rate of Return which is known as Dividend.
Secured  It may or may not be secured against the assets.  it is not secured but have a preference to repayment.
Voting Rights It does not have voting rights. It does have voting rights.
Convertibility It can be convertible after maturity into an Equity share as well as preference share. It can be convertible into an equity share. 
Risk Debenture holders are relatively safe. Shareholders are at a greater risk. 
Repayment will be repaid after a specific period.  it will not be repaid through the whole life of the business.
Priority as to Repayment In the case of winding up of the company the payment made to debenture holders before the payment of made to preference shareholders. In the case of winding up of the company the payment made to the preference shareholders before the payment to equity shareholders.
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