Answer Posted / altaf husain
Debenture is liability to the company. When shareholders's
amount or capital is not enough to run the business or
company requires more amount, then company borrows the
required amount in the form of debenture. Debenture holders
are creditors to the company while shareholders are the
owner of the company in proportion to their shares they are
liable to bear profits as well as losses. While debenture
holder are safe they are liable to get a certain amount of
benefit for their investment + their principal amount after
finishing the period of loan.
If Company becomes insolvent so debenture holders are paid
first their amount after comes the shareholder in short
debenture holders are much safer than share holder they are
not responsible for the losses they are giving one kind of
loan to the company.
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