Q.What is the status of a debenture holder in a company?

A debenture-holder lends money to a company and remains, throughout the life of the debenture, a creditor of the company, entitled to a fixed rate of interest payable irrespective of profit and to repayment of principal on the terms fixed at issue, but carrying no voting rights (Section 71(2)) and no ownership stake. A shareholder, by contrast, contributes capital and becomes a member and part-owner of the company, entitled only to dividends declared out of profit, but ordinarily carrying voting rights and, on winding up, only a residual claim after every creditor, including debenture-holders, has …