The Key Difference Between Debenture and Share Capital

Debenture vs Share Capital
Feature	Debenture	Share Capital
Definition	A debt instrument issued by a company to raise funds, promising fixed interest.	Funds raised by a company through issuing shares representing ownership.
Ownership	Does not confer ownership; debenture holders are creditors.	Represents ownership stake in the company.
Return	Fixed interest paid periodically.	Dividends paid based on profits; variable and not guaranteed.
Risk	Lower risk as interest is fixed and paid before dividends.	Higher risk; dividends depend on company performance.
Maturity	Usually has a fixed maturity date.	Perpetual until shares are sold or company is dissolved.
Voting Rights	No voting rights in company decisions.	Shareholders have voting rights in company matters.
Priority in Liquidation	Debenture holders paid before shareholders.	Paid after debt holders in case of liquidation.
Issuance Cost	Generally lower issuance cost compared to shares.	Can involve higher issuance and regulatory costs.
Purpose	Used for raising debt capital for projects or operations.	Used to raise equity capital for business growth and ownership.