ZIMSEC O Level Commerce Notes: Differences between shares and debentures
Shares | Debentures |
---|---|
Capital contributed by shareholders | Loan capital |
Shareholders are owners of the company | Debenture holders are creditors to the company |
Dividends may fluctuate e.g. Ordinary share dividends | Interest is fixed |
Earn dividends | Earn interest |
Dividends are only paid when a profit has been made | Interest is paid whether or not profit has been made |
Are not attached or secured against company assets | Can be secured against company assets. |
Can be ordinary or preference shares | Can be mortgaged or naked. |
Are a risky form of investment | Are a more secure form of investment |
Cannot force a company into liquidation | Can force a company into liquidation |
Ordinary shares have voting rights | All debentures have no voting rights. |
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