Distinguish between shares and debentures. (OR alternative to Q.16)

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Accepted Answer

>

> [!TLDR]
> Shares = ownership capital with variable dividend and voting rights; debentures = loan capital with fixed interest and no voting rights, repaid earlier.
>
> | Basis | Shares | Debentures |
> |---|---|---|
> | **Status of holder** | **Owner** of the company | **Creditor** (lender) of the company |
> | **Return** | **Dividend** — variable, paid out of profits | **Interest** — fixed rate, a charge payable whether or not there is profit |
> | **Voting rights** | Equity shareholders have **voting rights** | Debenture-holders have **no voting rights** |
> | **Repayment on winding up** | Repaid **last**, after all creditors | Repaid **before** shareholders |
> | **Security** | Not secured by a charge | Usually **secured** by a charge on assets |
> | **Risk** | **Higher risk** (residual claim) | **Lower risk** (fixed, prior claim) | …

What	Why it matters
Date of allotment	The exact day ownership changed hands
Number and class of shares	Equity? Preference? How many?
Names, addresses, and PAN of allottees	Who are the new owners?
Amount payable and amount paid	Was it fully paid up or partly paid?
Consideration	Cash, or something else (like a patent or land)?
Basis of allotment	Was it a rights issue, bonus issue, or fresh issue?

Basis	Shares	Debentures
Status of holder	Owner of the company	Creditor (lender) of the company
Return	Dividend — variable, paid out of profits	Interest — fixed rate, a charge payable whether or not there is profit
Voting rights	Equity shareholders have voting rights	Debenture-holders have no voting rights
Repayment on winding up	Repaid last, after all creditors	Repaid before shareholders
Security	Not secured by a charge	Usually secured by a charge on assets
Risk	Higher risk (residual claim)	Lower risk (fixed, prior claim)

Q.Distinguish between shares and debentures. (OR alternative to Q.16)

Concept understanding — Company Allotment Return

Company Allotment Return — The First Meeting

The Intuition: Why does the government care?

The Precise Statement

What goes into it?

A critical detail: Allotment vs. Application

Q.Distinguish between shares and debentures. (OR alternative to Q.16)

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