Valuation report - Allotment upon conversion of Debentures - Form PAS-3

[Lalit Tiwari]

Dear members,

Please confirm if we need to attach valuation report for allotment of equity shares upon conversion of Debentures

I am of the view same is not required as number of shares to be allotted and conversion ratio was already decided at the time of issuance of convertible Debentures.

Regards

Lalit.

[JAY SUTHAR]

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Jayant Suthar

M.Com., FCS, ACMA

[Lalit Tiwari]

We need to take the valuation report that for every debenture of rs 10 each we will allot one equity share of rs 10each which is the conversion ratio.

This conversion ratio was already decided at the time of issuance of convertible Debentures.

Regards

Lalit.

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[abhay pandey]

Dear Sir,

Rule 13(i) of share capital and debenture rule 2014-  Issue of share on conversion of Loan /Debenture Into Equity,the Company will have to comply the condition of Section 42 and rule 14 of Companies (Prospectus and allotment of securties )2014.

also refer section 247 and there valuation rule. You need valuation report from registered valuer.

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Thanks & Regards

CS Abhay Pandey 

Abhipra Capital Limited

Membership No- 55936
Mobile No: 9340744489 

                     : 9425436729

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[Lalit Tiwari]

Dear Abhay,

Thank you guiding me to the relevant legal provisions. Appreciate the same.

So even though the allotment of 1 equity share of rs 10 each will be allotted for 1 Debenture of rs 10 each, I understand we need to attach valuation report with value of Debentures as on date of Allotment.

Regards

Lalit.

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[Bijay Kumar]

Hi the valuation report is required either at time of issue or at time of conversion. this is the rule in preferential allotment. if the conversion ratio was determined based on valuation report at time of issue then you dont need a valuation report at time of conversion. 

Regards

On Mon, Apr 6, 2020 at 11:20 AM Lalit Tiwari <lalitti...@gmail.com> wrote:

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[deepali balpande]

Dear Members,

I wish to ask if a company wishes to issue non convertible debentures, is valuation report required for issue of debentures?

Kindly reply.

Thanks & Regards,

Deepali

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[Nitin Pahilwani]

You require valuation report...

Thanks & Regards

_____________________________________

Nitin Pahilwani Register Valuer & Chartered Accountant N Pahilwani & Associates 9898963506 ni...@npahilwani.com www.npahilwani.com 501, Silver Oak, Near SBI, Akota, Vadodara

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[deepali balpande]

kindly give refere of any sec

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[Parchuri Sanjay]

42 read with rule 14 of prospectus and allotment rules

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[abhay pandey]

Dear Sir,

Yes, You are right. Valuation report is required in case of conversion of loan or debenture into Equity from registered valuer and the same should also be attached in PAS-3.

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[Parchuri Sanjay]

But If you have taken valuation report capturing the conversion ratio or formula the same can be used.

Regards 

Sanjay 

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[Parchuri Sanjay]

I meant If you had taken valuation at the time of issue capturing the conversion modalities same can be used.

[Lalit Tiwari]

The problem is convertible debentures were issued in year 2010. Convertible after 10 years and valuation was taken as per FEMA Guidelines where in FMV was Rs. 4.08. So 1 debenture of rs 10 was to be converted into 1 equity share of rs 10 each after 10 years (2020) as per special resolution filed with ROC. So the conversion was decided based on this valuation.

Now, If I go with valuation today then each debenture fmv will be more than rs 10 which defeats the very passing of resolution and valuation taken in 2010. I doubt there was no valuation mechanism in 1956 act, it was required under FEMA for filing FCGPR.

Regards,

Lalit.

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[Parchuri Sanjay]

Yes, it was under fema not under CA, 1956.

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