Consider the following differences between Debenture holder and Equity share holder:
- While Equity share holder possess ownership rights in the company, debenture holders do not possess ownership rights
- At the time of liquidation, debenture holders are given preferences over equity holders
Which of the above statements is/are correct?
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