Page 4 - LN ISSUE OF DEB

Participation
They are entitled to
They are not entitled to take
in take part in the
part in the management
management
Management

They enjoy the share of They get interest and are not
Share of Profit
profit as dividend entitled to share the profits

Debenture holders are safe

Shareholders are the in comparison of
Risk Taker
Risk Taker shareholders (for secured
debentures)

Voting Rights They have right to vote They don’t have right to vote

Shareholders can not Debenture holders can
Option of
convert their shares in convert their debentures in
Convertibility
debentures Equity Shares

Types of debentures

Convertibility point of view :

there are two types of debentures: Convertible debentures, which are

can be converted into equity shares of the issuing company after a

predetermined period of time. These may be Partly Convertible

Debentures (PCD): A part of these instruments are converted into Equity
shares in the future at notice of the issuer. The issuer decides the ratio for

conversion. This is normal y decided at the time of subscription.

Fully convertible Debentures (FCD): These are ful y convertible into
Equity shares at the issuer’s notice. The ratio of conversion is decided by

the issuer. Upon conversion the investors enjoy the same status as

ordinary shareholders of the company.