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Debenture and Preference shares are often confused with each other,,

Basically Preference share is an equity type instrument but debenture is a straight forward loan.

Debenture bear fixed interest and its a TAX deductible expense. Company may goes into liquidation if it fails to pay interest on debenture. on the other hand company pay wish to choose not paying any dividend to preference share holder in any given period.

debenture holder are lender to company

Preference share holder owns the company

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12y ago
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14y ago

Preference share is less risk prone. When a firm files bankruptcy, the pref. share holders will get their money back (by selling firm's assets)

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Q: What is the difference between preference share and debentures?
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What are the difference between equity share capital and preference shares capital and examples?

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Preference share holders have preference over common stock holdres in dividend distribution as well as in terms of capital invested.


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