ISSUE OF COMPULSORY CONVERTIBLE DEBENTURES

As per my limited understanding of the provisions, section 71 read with Rule 18 Which provide the express authority to Debenture trustee,  in case the violation of terms of issue at which conversion or redemption needs to do, apply or  file petition to NCLT to secure the interest of debenture holders. 

Now one another way out to do this by getting the express consent of each and every holder of debt securities for the redemption and this transaction also approved by NCLT. 

Trust this clarifies the position. 

As per my limited understanding of the provisions, section 71 read with Rule 18 Which provide the express authority to Debenture trustee,  in case the violation of terms of issue at which conversion or redemption needs to do, apply or  file petition to NCLT to secure the interest of debenture holders. 

Now one another way out to do this by getting the express consent of each and every holder of debt securities for the redemption and this transaction also approved by NCLT. 

Trust this clarifies the position. 

As per my limited understanding of the provisions, section 71 read with Rule 18 Which provide the express authority to Debenture trustee,  in case the violation of terms of issue at which conversion or redemption needs to do, apply or  file petition to NCLT to secure the interest of debenture holders. 

Now one another way out to do this by getting the express consent of each and every holder of debt securities for the redemption and this transaction also approved by NCLT. 

Trust this clarifies the position. 

Hi Harish,

Thanks for your reply.

If while drafting the terms and conditions for the issue, we mention there with permission of trustee there is option to repay the debt to debenture holders without the conversion then it means it shall work that way.

Further since we are planning for CCD so pls check if authorized capital is to be raised while issuing such debentures or not?

Thanks and Regards

Medha

This can be done in that way but the approval is not limited to Debenture trustee but also from the debt holder also. 

As far as Authorised capital is concerned you already put The flexible condition for maturity you have two option either convert or redeem. 

So accordingly plan it out for the increment of authorised share capital once you proceed with the option of conversion. Otherwise there is no requirement for change of memorandum by way of increment in Authorised share capital.