Loan Capital V Share Capital

Question 1

Loan capital
What is a debenture?
What voting rights do they have?
What payment rights do they have?
What priority do they have?
Is capital maintained?

Answer 1

A debenture is a document that is issued by a company containing acknowledgement of it’s indebtedness
A debenture is a creditor and so has no voting rights
A debenture has contractual rights to interest irrespective of profits available
A debenture takes priority in repayment
Capital is not maintained

Question 2

Share capital
What is a share?
What voting rights do shareholders have?
What rights do shareholders have to income?
When are shareholders paid in liquidation?
Is capital maintained?

Answer 2

A share is the interest of a shareholder in a company measured by a sum of money. It has rights and obligations 
A shareholder is a member (owner) of the company and has rights depending on the class of share held 
Dividends depend on the availability of profits 
Shareholders are paid after creditors depending on the type of share held but can participate in surplus assets 
Capital is maintained