Types of Securities

 1. Ordinary 

# It gives the ownership to the holders.

# Ordinary Shareholders are the owner of the company.

# These shareholders do not enjoy the preference regarding payment of dividend and repayment of capital.

# It means if the company make a profit, a shareholder will get profit and if not then shareholder also does not.

# Ordinary Share Holders can participate in AGM (Annual General Meeting).

Dividend: The part of earning a profit earned by a company and give it to the shareholders.

 2. Preference Shares 

# As the name suggests they get the preference over the equity / ordinary shares.

# They get dividend at fixed rate amount before equity / ordinary shares.

# When company winding up the return of share capital Preference goes to the preference shares holder before Equity Shares holder.

But,

# Preference shares do not carry a VOTING RIGHTS.

Types of Preference Shares:

1. Cumulative Preference Shares: When an unpaid dividend is considered as arrears and are carried forward to subsequent years called Commulative Preference Shares.

2. Non-Cumulative Preference Shares: They’ve rights to get a fixed rate of dividend out of the profit of current year only.

# They do not have the right of arrears i.e., if company fails to pay dividend in a particular year then that need not to be paid out of future profits.

3. Redeemable Preference Shares: can redeemed or repaid after the expiry of fixed period or after giving the notice.

4. Non-Redeemable Preference Shares: Can’t be redeemed during the lifetime. Amount only get at the time of liquidation of company.

5. Participating Preference Shares: After paying a dividend of equity shareholder The Participating Preference Shares Holder can again participants in any profit of the company.

6. Non Participating Preference Shares: They Simply can’t participate like the before one.

7. Convertible Preference Shares: Those shares can convert into equity shares after fixed period. (but according to Company’s Term and Conditions)

8. Non – Convertible Preference Shares: They are not convertible in Equity Shares.

 3. Debentures / Bonds 

# These are not Shares.

# Debentures is a long-term loan.

# Companies can raise additional capital by issuing the Debentures.

# No Voting right. (as Share Capital).

# Companies can raise additional capital by the issue of debentures.

# Debenture gets fixed income in the form of interest.

Types:

1. Registered Debentures: Registers in the company.

# the amount will be paid only if they have a name on the register.

2. Bearer Debentures: Not Registered entitled to get interested.

3. Redeemable Debentures: Issued for a fixed period.

# So the amount on the expiry of such period.

4. Non – Redeemable Debentures: No Redeemable in the lifetime.

# This amount paid only when the company goes into liquidation.

5. Convertible Debentures: can be converted into shares of the company on the expiry of the pre-decided period.

6. Non Convertible Debentures: Can’t convert into shares.

 Based on Priority Debentures are divided in 2 parts: 

1. First Debenture: These debentures redeemed before any other debentures.

2. Second Debenture: After the redemption of the first debenture this type of debenture comes.

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