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Difference between preference share and debentures share |
| Answer» \tBasis of DifferenceDebenturePreferences ShareMeaningThe 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.TypesIt is a type of loan.\xa0It is a type of Capital.\xa0Rate of ReturnIt has a fixed rate of Return which is known as Interest.It has a fixed rate of Return which is known as Dividend.Secured\xa0It\xa0may or may not\xa0be secured against the assets.\xa0it is not secured but have a preference to repayment.Voting RightsIt does not have voting rights.It does have voting rights.ConvertibilityIt can be convertible after maturity into an Equity share as well as preference share.It can be convertible into an equity share.\xa0RiskDebenture holders are relatively safe.Shareholders are at a greater risk.\xa0Repaymentwill be repaid after a specific period.\xa0it will not be repaid through the whole life of the business.Priority as to RepaymentIn 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.\t | |