Shares

Shares are securities representing a portion of the nominal capital of a company. A person who is having the shares is called a share holder Shareholder is the owner of the company and has voting rights and also takes part in the management of the company Shareholders will get a portion of the profit called dividend which is dependent on the profits of the company. It can be declared by the directors of the company out of profits only Shares cannot be converted into debentures or preference shares Least priority to get back money on liquidation

Preference Shares
preference share is the unit part of debenture and it is chosen according to the choice Person who holds a preference share is called a preference share holder Preferred stock usually carries no voting rights.

Debentures
A debenture is a fixed interest load, issued by a company and, secured by it's assets. A person who is having the debentures is called a debenture holder Debenture holder is a creditor to the company and cannot take part in the management of the company Debenture holders get interest on debentures and will be paid in circumstances, whether there is profit or loss will not affect the payment of interest on debentures Debentures can be converted into shares Increased priority to get back money on liquidation

Preference shares pay a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so. Preference shares can be converted into shares It may carry a dividend and may have priority over common stock in the payment of dividends and upon liquidation

Shares at discounts can be issued only after following legal formalities Shares convertible to debentures cannot be issued Assets of companies cannot be mortgaged in favour of share holders preference investor has a greater claim on the company's assets than common stockholders.

There is no restriction on issue of debentures on discount Debentures convertible to shares at the option of debenture holders can be issued Assets of companies can be mortgaged in favour of debenture holders