Following are the main differences between shares and debentures:

1. Ownership
The share of a company provides ownership to the shareholders. Debenture-holders
are creditors of a company who provide loan to the company.
2. Identity
Person holding share is known as shareholder. person holding debenture is known
as debenture-holder.
3.Certainty Of Return
No certainty of return in case of loss for the shareholder. Debenture-holder rec
eives the interest even if there is no profit.
4. Convertibility
Shares can not be converted into debentures. Debentures can be converted into sh
ares.
5. Control
Shareholders have the right to participate and vote in company's meeting. Debent
ure holders do not possess any voting right and can not participate in meeting.
We discuss about difference or distinction points between Share and Debenture un
der these headings:-
1. Representation:-
Share: Share represent a share in the share capital of the company.
Debenture: IT represent the acknowledgment of debts of the company.
2. Position:-
Share: Share holders are the owner of the company.
Debenture: Actually they are not owners but are considered as creditors of the c
ompany.
3. Participation:-
Share: They have right to participate in management of the company thought Board
of Directors.
Debenture: They cannot conduct the management of the company neither directly no
t indirectly.
4. Investment Return:-
Share: Share holders have got right to participate in the profit of the company
at the specific or variable rate.
Debenture: Debentures holder have got right to enjoy interest at the fixed rate.
5. Withdrawal Rights:-
Share: The shareholders cannot withdraw their share capital unless the company g
oes into liquidation or decides to reduce its share capital
Debenture: The amount of the debentures is returnable after the expiry of the sp
ecific period.
6. Justification:-
Share: The process of distribution of point or loss among the share holders may
be justified in Islam.
Debenture: As debenture holder have to receive interest in every case irrespecti
ve of the profit or loss it cannot be justified in Islam.
7. Records Position:-
Share: The rights and powers of the share holders are laid down in Article of As
sociation.
Debenture: The rights and powers of the debenture holder are mentioned in the ce
rtificate issued at the time of accepting loan.
8. At the time of Liquidation:-
Share: Share holders have got second right in regard to repayment of capital if
there is any balance at time of winding up of the company.
Debenture: In case of liquidation debenture holder have first right to get back
their amount from the company.
9. Nature of Securities:-
Share: As the shares are not issued against the charge of any property of compan
y so the are considered in secured.
Debenture: As the assets of the company may be charged against the loans, so deb
entures are regarded secured security