| Points of difference | Shares | Debentures |
| 1. Form of capital | It is the owner’s funds | It is borrowed fund |
| 2. Ownership | Share-holders are considered true owners of company. | Debenture holders are considered creditors of company |
| 3. Returns | Company pays dividend to share holders | Company pays interest to debenture holders |
| 4. Refund | Share capital is not returned to share-holders except in case of liquidation | Debenture capital is returned to the debenture holders after a specific time |
| 5. Preference of paying back | During liquidation, shareholders are the last to obtain their capital | During liquidation debenture holders get their capital quite before. |
| 6. Rate of return | Rate of dividend varies | Rate of interest remains fixed |
