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Redemption of shares and debentures
for redemption of debentures, we create debenture redemption fund and also invest it and reinvest it along with interest....but my question is....In case of shares if we are to redeem it at premium which have been already issued at par..then we don't create any fund and reinvest it....why????
Replies (4)
Shareholder are the owner of the business unlike Debenture Holder who are creditor of the business. Payment to Debenture holder is a must so Redemption Account is created .
And what's about preference share which are redeemable????
Debentures and shares are different altogether ..
debenture are loan instrument.
IT GIVES THE THE OWNER A RIGHT TO THE INSTRUMENT.
COMPANY WILL REPAY THE AMOUNT AFTER FEW YEARS.
SHARES ARE OWNERS OF THE COMPANY
.
GIVES THE RIGHT to the ownership of the company.
debenture are loan instrument.
IT GIVES THE THE OWNER A RIGHT TO THE INSTRUMENT.
COMPANY WILL REPAY THE AMOUNT AFTER FEW YEARS.
SHARES ARE OWNERS OF THE COMPANY
.
GIVES THE RIGHT to the ownership of the company.
Ok..got it....thank you all
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