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Redemption of Compulsorily convertible debentures


Rahim (Business)     02 December 2020

Rahim
Business 
 1 likes  37 points

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A private limited has taken a loan from other private companies.

Later that loan was converted to 5 years Compulsory Convertible Debentures.

Now, can that debentures be redeemed before its maturity date or will have to issue shares on maturity date?

Is the company breaking any rules if debentures are redeemed without conversion to equity shares?

Kindly help.

Rama chary Rachakonda

Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)     02 December 2020

Rama chary Rachakonda
Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294 
 83 likes  1377 points

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compulsory convertible debenture (CCD) is a type of bond which must be converted into stock by a specified date. So specified date is important here. Before that date not valid.

Chirag

Chirag (Professional)     07 December 2020

Chirag
Professional 
 76 likes  897 points

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CCD itself stands that it will Convert into Shares at such price in future date, and That's why Relaxation from Deposit regulations also given, Else considered as unsecured debentures which need to be listed on RSE (even by private companies) or secured by appointing DT and Securing with assets and filing Charge to ROC, Even though it's possible only through NCLT approval. (C&A)


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