Difference among Equity Share, Preference Share and Debenture

	Equity Share	Preference Share	Debenture
Meaning	Company owned capital by selling shares.	Company owned capital by selling shares.	A debt instrument used by company to borrow money at a fixed rate of interest.
Status	Owners. (limited by shares)	Owners. (limited by shares)	Creditors.
Mode of Return	Shareholders are given dividends.	Shareholders are given dividends.	Debenture holders are given interest.
Payment of Return	The dividend is paid to the shareholders out of the profit earned by the company after the payment of all liabilities	The dividend is paid to the shareholders out of the profit earned by the company before the payment to the equity shareholders.	Interest can be paid to the debenture holders whether the company has earned profit or not.
Security for Payment	No	Only redeemable preference shareholder can claim money after a fixed period of time.	Yes
Voting rights	Equity shareholders have voting rights	Preference shareholders have no voting right on matters not directly affecting their right	Debenture holders have no voting rights in company’s general meeting.
Conversion	Equity shares can never be converted	Preference shares can be converted into equity shares.	Convertible debentures can be converted into equity shares on maturity.
Trust deed	No trust deed is executed	No trust deed is executed	When the debentures are issued to public, trust deed must be executed.
Repayment of capital	In the event of winding up of the company, equity shares are repaid at the end	In the event of winding up of company, preference shares are repaid before equity shares.	Debentures got priority over share and they are repaid before shares.

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