Distinguishing share and bond based on the following criteria:
|
SHARE |
BOND |
|
| SIMILARITY | – Both belong to the capital structure of a business
– They are securities issued by a joint stock company – Ownership: individuals, organizations |
|
|
DIFFERENCE |
||
| Characteristics | A share is a certificate issued by a joint stock company, or an entry in a ledger or electronic record, confirming ownership of one or more shares of that company. | Bonds are securities that confirm the legal rights and benefits of the owner to a portion of the debt issued by the issuing organization.
Corporate bonds, in which the term is one year or more and issued by the enterprise, confirm the legal rights and benefits of the owner to a portion of the debt issued by issuing enterprise. |
| Nature | Shares are equity securities (the holders of shares are the owners of the company), which increase the company’s equity. | Bonds are debt securities (the holders of bonds are the creditors of the company), which do not increase the company’s equity. |
| Investors’ capacity | The owner of a share is a shareholder and a member of the company. He/she owns a portion of the company’s profits in the form of dividend payments. | The owner of a bond is a creditor of the company as the bond is a type of debit note. |
| Rights | Be eligible for dividends, and dividends depend on the business performance. | Be paid back as debt, receive periodic interest payments with a stable interest rate, and such payments are not dependent on business performance. |
| Obligations | – The owner of a share is liable for the company’s debts in proportion to their respective capital contribution to the company.
– In the event of the dissolution or bankruptcy of the company, shareholders are only entitled to recover their contributed capital after all obligations and debts of the company have been settled. |
– The owner of a bond is not responsible for the company’s debts.
– In the event of the dissolution or bankruptcy of the company, the bond owner has priority in receiving repayment of the principal and interest of the bond over the shareholder of stocks.
|
| Company’s Legal consequences of issuing securities | The result of issuing shares is to increase the charter capital of the joint stock company and change the management power of the shareholders. | The result of issuing bonds is to increase the borrowed capital of the joint stock company and will not affect the management power of the shareholders. |
Source: by collecting and summarizing
REFERENCES
1. Judgment on Dispute over the Contract of transferring shares and bonds: Page 1 – 14, https://fdvn.vn/tong-hop-20-ban-an-tranh-chap-ve-hop-dong-mua-ban-co-phan-co-phieu-trai-phieu/ , updated on 21/12/2022.
2. Phan Phương Nam (2021), Law on private placement of corporate bonds: inadequacies and recommendations for improvement,
http://lapphap.vn/Pages/tintuc/tinchitiet.aspx?tintucid=210713 , updated on 03/03/2021
3. Lê Thị Thu Thủy (2009), The basics of share and bond ownership, Hanoi National University, updated on 12/05/2009.
Link PDF: DISTINGUISHING SHARE AND BOND
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