Conversion of CCPreference Shares into Equity Shares

[ishajai...@gmail.com]

Hi Everyone,

Kindly address my below query:

Our Company has issued and alloted Compulsory Convertible Preference shares in the year 2010 to Foreign Company in Singapore which has to be converted into equity shares with seven years.

Query

1. How the conversion price has to be determined? As per RBI Regulation, Price cannot be lower that fair value worked out, at the time of issuance.

2. As per the terms of the issue of Pref Shares, shares are to be converted in the ratio of 1:1. Price at the time of Issue was Rs. 100 (Rs. 10 + Rs. 90 premium). Price as per Auditor valuation report is today is Rs. 70. How to deal with it.

3. Stamp duty was not paid at the time of issue of preference share certificate. Do we have to pay the stamp duty now on conversion?

Regards,

Isha