What are the advantages of issue of debentures over equity shares?

Merits of Debentures over Equity Shares (i) Debentures are preferred by investors who want fixed income at lesser risk. (ii) Debentures are fixed charge funds and do not participate in profits of the company. (iii) The issue of debentures is suitable in the situation when the sales and earnings are relatively stable.

How does issue of debentures does not affect the control of equity shareholder?

As debentures do not carry voting rights, financing through debentures does not dilute control of equity shareholders on management. 5. Financing through debentures is less costly as compared to cost of preference or equity capital as the interest payment on debentures is tax deductibel.

What are advantages of debentures over equity shares?

In the case of ZIDs, the difference between the face value of the debenture and its purchase price is the return to the investor. Merits of Debentures over Equity Shares (i) Debentures are preferred by investors who want fixed income at lesser risk. (ii) Debentures are fixed charge funds and do not participate in profits of the company.

What are the advantages and disadvantages of unsecured debentures?

Unsecured debenture does not carry any charge or security on the assets of the company. 2. Registered and Bearer: A registered debenture is recorded in the register of debenture holders of the company.

Is the rate of interest lower on debentures?

Usually, the rate of interest is lower than the rate of dividend payable on preference shares and equity shares. So raising of capital through debentures is less costly. 4.

What are the advantages and disadvantages of convertible debentures?

Therefore, the same number of hands share the profits before and after the new project. However, in the case of convertible debentures (debentures who convert into equity shares after a certain point of time), this may no more remain an advantage.