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(i) Securing finance through debentures is more expensive than through ordinary shares.
(ii) Debentures reduce the borrowing power of a company while shares enhance.
(iv) Share dividends can be converted to bonus shares while it is not possible with debentures interest.
(v) Debentures are units of loans which must be paid by a public company unlike ordinary shares which is a unit of capital and companies are not obligated to pay.
(vi) Debentures holders are paid in fixed rates of interest while ordinary shares interest is not fixed.
(vii) Failure to pay debentures rates leads to a company being declared bankrupt unlike payment of share dividends.
(viii) Debentures interest must be paid by a public company unlike ordinary shares.
(ix) In the event of a company winding up, it is obliged to pay debentures first while shares may come last.
(x) Raising money through shares requires no security while debentures may require a security.
maurice.mutuku answered the question on July 21, 2017 at 06:35
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