Write any three difference between equity …

1. Status

Shares are ownership securities. The holders of shares are the owners of a company.

Debentures are creditorship securities. Debenture holders are creditors of a company.

2. Return on Investment

Dividend is paid on shares by the company. The rate of dividend is not fixed.

Interest is paid on debentures at a fixed rate.

3. Repayment

Equity shares capital is not to be returned back except in the case of liquidation.

The amount of debentures is paid back to debenture-holders after a fixed time.

4. Right to Participate

Shareholders have a right to participate in the affairs of the company.

Debenture holders can’t participate in the affairs of the company.

5. Liquidation

Equity shares get the refund only when all liabilities have been paid off.

Debenture holders get payment in priority as compared to all the creditors.

6. Security

Shareholders being owners, have to bear maximum risk.

Debentures are usually secured by a fixed or floating charge.