| S. No. | Basis of Distinction | Share | Debenture |
| 1. | Capital vs Loan | A share is a part of the Capital of the Company, therefore, the shareholders are the owners of the Company. | A debenture is a part of the loan and as such, the debenture holders are the creditors of the Company. |
| 2. | Dividend vs Interest | A shareholder gets dividend from the Company, | A debenture holder gets interest from the Company. |
| 3. | Fluctuating or Fixed rate of dividend or interest | Dividend is paid only when there are profits. The rate of dividend may fluctuate from year to year depending upon the profits and decision of the directors. | The rate of interest is fixed and it must be paid irrespective of the Company making a profit or incurring a loss. |
| 4. | Voluntary or compulsory redemption | It is at the option of the Company to return the amount of shares by buying back its own shares. | The amount of debentures must be returned according to the terms of the issue. |
| 5. | Priority of repayment of principal in case of winding up | In the case of winding up, the payment of share capital is made after the repayment of debentures. | In the case of winding up, the payment of debentures is made before the payment of share capital. |
