Basis of Diffeerence | Shares | Debentures |
Ownership | By purchasing share shareholders become the owners of the company. | By purchasing debenture they only become the creditors of the company not owners. |
Priority | Shareholders receive dividend and return of capital only after debenture holders receive. | In return of capital and payment of interest first priority is given to the debenture holders. |
Certainty of return | The return from investment made on share capital is uncertain. Shareholders only receive dividend when the company run in profit. | In debenture, the interest rate on debentures are pre specified and interest income is certain. |
Repayment | The investment made on share capital do not return until the company are not liquidated. | The investment made on debenture is return on the maturity period specified in the contract. |
Convertibility | Share cannot be converted into debenture. | Debenture can be converted into share. |
Control | Shareholders are real owners of the company and they can take part in the company’s operation and management so they can control the company. | Debenture holders do not have right to take part in company’s operation and management. So they cannot control the company. |