Page 2 - LN ISSUE OF DEB
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company. The holders of the holder of a debenture is the
shares may be described as creditor of the company.
part owner of the company.
2. Return Return on share is known as Return on a debenture is
dividend. A company declares known as interest and the
dividend only when there are company compulsorily pays it
profits and its rate may vary at a fixed rate whether there
from year to year. are profits or losses.
3. Dividend is an appropriation Interest on debenture is a
Appropriation of profit and is therefore charge against profits and is
debited in Profit & Loss therefore debited in Profit &
Appropriation Account. Loss Account.
4. Charge on Shares do not create any Debentures create a charge
Property charge on the assets of the on the asset of the company.
company.
5. Normally the share capital is The amount of debentures
Redemption not returned during the has to be returned after a
lifetime of the company. stipulated period of time as
per the conditions of issue.
6. Discount Shares can be issued at There are no restrictions on
on Issue discount only when the issue of debentures at a
conditions lay down in discount.
Section 79 of the Companies
Act 1956 are fulfilled.
7. Premium The premium received on Premium received on issue of
on Issue issue of shares can be debentures can be utilised by
utilised by the company
