Debenture certificate. Image credit catawiki.com
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. |
To access more topics go to the Commerce Notes page.
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