Consider the following differences between Debenture holder and Equity share holder:

  1. While Equity share holder possess ownership rights in the company, debenture holders do not possess ownership rights
  2. At the time of liquidation, debenture holders are given preferences over equity holders

   Which of the above statements is/are correct?

Answer: [C] Both 1 & 2

Both are correct statements
A debenture is one of the capital market instruments which are used to raise medium or long term funds from public. A debenture is essentially a debt instrument that acknowledges a loan to the company and is executed under the common seal of the company. Equity shares or the Ordinary Shares means that part of the share capital which is not a Preference share capital. At the time of liquidation, debenture holders are given preferences over equity holders.

This question is a part of GKToday's Integrated IAS General Studies Module