Compulsory convertible debentures are debt or equity

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Ravi (Querist)
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19 July 2016 Dear All,

I want to know that whether Compulsory Convertible Debentures (CCDs) having buy/put option are debt or Equity. Also please provide any supporting for the answers.

Thank you in advance.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 July 2016 Till the time of conversion, it is DEBT.
Once converted into equity, it becomes equity.
(The answer is from the view point of accountancy.)
For a banker, the company may argue, that since it is compulsory covertible, please treat it as equity

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Ravi

Ravi (Querist)
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19 July 2016 Amol ji can u please provide any supporting for the same i.e. any RBI circular or any guideline.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 July 2016 No.....RBI has not clarified whether or not it is debt or equity

https://indiacorplaw.blogspot.in/2009/03/fdi-compulsorily-convertible-debentures.html

https://www.india-financing.com/Understanding_Compulsory_Convertible_Debentures.pdf

Ravi

Ravi (Querist)
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19 July 2016 Amol ji thanks for the information.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 July 2016 you are most welcome.

Ravi

Ravi (Querist)
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19 July 2016 Need more help on this matter.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 July 2016 yes, you can write back anytime, no issues.

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