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Debentures offer several advantages over shares, primarily in terms of fixed returns and risk. Debenture holders receive regular interest payments, providing a predictable income stream, while shareholders may receive variable dividends that are not guaranteed. Additionally, debentures generally carry lower risk, as they have a higher claim on assets in the event of liquidation compared to shareholders. Lastly, issuing debentures can be less dilutive to ownership, allowing existing shareholders to maintain greater control over the company.
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What Advantages does issue of debentures over equity shares?
Cost is the major advantage. Debentures are to be serviced for the contracted period of time, while equity servicing is perennial.
Why are the type of debentures?
Debentures are categorized based on various characteristics, such as security, convertibility, and redemption. Secured debentures are backed by collateral, while unsecured debentures rely on the issuer's creditworthiness. Convertible debentures can be transformed into equity shares, while non-convertible debentures cannot. Additionally, redeemable debentures have a fixed maturity date for repayment, whereas irredeemable debentures do not have a set repayment term.
What is the advantages and disadvantages of debentures?
You get a fixed preannounced return on your investment. You do not gain from the performance of the company. You may be affected by the inability of the company to honor its commitment to you by way of payment. You have a priority claim over the shareholders in case of a company going bankrupt. Country specific laws apply. Some debentures are converted into equity shares after a specific period Note: Please read the terms and conditions carefully.
What are registered debentures?
Certain debentures are made out in the names of the particular persons whose names appear in the register of debenture holders. Such debentures which appear in this register are known as "Registered Debentures". They are transferable in the same way as shares. Interest as well as the debenture amount in these cases is payable only to the registered holders.
What are the uses of share premium?
Share premium is used for many purposes and 1 of them is redemption of preference shares and debentures
What Advantages does issue of debentures over equity shares?
Cost is the major advantage. Debentures are to be serviced for the contracted period of time, while equity servicing is perennial.
What is the nature of shares or debentures in Section 44 of Companies Act?
The nature of shares or debentures in section 44 of the Act is movable and transferable in accordance with the article of association.
Why are the type of debentures?
Debentures are categorized based on various characteristics, such as security, convertibility, and redemption. Secured debentures are backed by collateral, while unsecured debentures rely on the issuer's creditworthiness. Convertible debentures can be transformed into equity shares, while non-convertible debentures cannot. Additionally, redeemable debentures have a fixed maturity date for repayment, whereas irredeemable debentures do not have a set repayment term.
Four components of capital structure?
the components of capital structure(CS) includes: 1. CS with equity sahres only. 2. CS with equity and preference shares. 3. CS with equity and debentures. 4. CS with equity shares, preference shares and debentures.
What is the advantages and disadvantages of debentures?
You get a fixed preannounced return on your investment. You do not gain from the performance of the company. You may be affected by the inability of the company to honor its commitment to you by way of payment. You have a priority claim over the shareholders in case of a company going bankrupt. Country specific laws apply. Some debentures are converted into equity shares after a specific period Note: Please read the terms and conditions carefully.
What are the advantages of selling debentures?
þ Debentures can be used to raise very long-term finance, (ex. 25 years.)
What are three other names for shares?
Ordinary and preference shares debentures securities also things like equity stock etc.
Under what conditions may the directors of acompany prefer to issue ordinary shares rather than debentures?
ordinary shares are equity whereas debentures are debt - debt is always payable, whereas, equity holders do not always necessarily demand a dividend payment immediately. it would depend on what the company wanted to use the funds for. if the funds were used to fund a project where the returns were not expected for a few years, a company may wish to issue shares rather than debentures as the debentures would have to be paid regardless of when the returns came.
What are registered debentures?
Certain debentures are made out in the names of the particular persons whose names appear in the register of debenture holders. Such debentures which appear in this register are known as "Registered Debentures". They are transferable in the same way as shares. Interest as well as the debenture amount in these cases is payable only to the registered holders.
Discount on issue of debentures is a?
capital loss to be written off over the tenure of the debentures .
Sources of long term working capital?
•Equity shares •Debentures •Retained earnings •Public deposits
What are the uses of share premium?
Share premium is used for many purposes and 1 of them is redemption of preference shares and debentures
