compulsory convertible preference shares into equity- URGENT HELP

[kapil dudeja]

Dear members,

I need to convert compulsory convertible preference shares into equity. Can someone please share the process for the same?
-Thanks

-Warm Regards

Kapil Dudeja

[kapil dudeja]

Please Reply!

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Kapil Dudeja
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[Dimple Malik]

Dear Kapil,

Section 55 provide the Procedure for Conversion Of Compulsorily Convertible Preference Shares (CCPS) Into Equity Shares

The company can convert CCPS into equity shares by following the terms and conditions it was issued and allotted. By passing board resolution the same can be converted.

 

Step 1

Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013,(not less than 7 days in writing) for convening a meeting of the Board of Directors.

 

Step 2

In case of listed companies, inform the STOCK EXCHANGE with which shares of the company are listed atleast 2 days before the Board meeting.

 

Step 3

Hold Board Meeting

Convene and hold a Board Meeting for passing the resolution for conversion of compulsorily convertible preference shares into equity shares of the company.

 

Step 4

In case of listed company, immediately within 15 minutes of the conclusion of the Board meeting, intimate the STOCK EXCHANGES with regard to the Board’s decision.

 

Step 5

E-form Filing

File Form SH-7 for intimation of redemption of preference shares which are converted into equity shares within 30 days of the Board meeting along with a copy of Board resolution approving conversion of CCPS into equity shares.

File return of allotment in Form PAS-3 with Registrar of Companies within 30 days of Board Meeting with the following attachment:

·        List of allottees

·        Copy of Board resolution approving conversion of CCPS into equity shares.

 Step 6

Issue Share Certificates to the allottees within a period of 2 months from the date of allotment

 Step 7

Update the register of members in Form MGT-1 after conversion of compulsorily convertible preference shares.

 

Draft Resolution (for Private Limited Company)

 

RESOLVED THAT, the consent of Board of Directors be and is hereby accorded for conversion of ________________ Cumulative Compulsorily Convertible Preference shares of Rs. 10/- each into equity shares of Rs.10/- each ranking pari passu with the existing equity shares of the Company.

 

RESOLVED FURTHER THAT Consequent upon conversion the issued equity capital of the company be  increased from existing Rs. ____________ to Rs._____________ and the issued preference capital of the Company be reduced from existing Rs. ____________ to Rs. Nil  .

 

RESOLVED FURTHER THAT consequent upon conversion ____________  (___________________only) Equity shares of Rs.10/- each fully paid up in share capital of the company be and hereby allotted to the following entity as per the details given below:

 

S. No	NAME AND OCCUPATION OF ALOTTEE	ADDRESS OF THE ALLOTTEE	NATIONALITY OF THE ALLOTTEE	NO. OF EQUITY SHARES ALLOTTED	TOTAL AMOUNT INCLUDING PREMIUM (IN RS.)	TOTAL AMOUNT TO BE PAID ON CALLS (INCLUDING PREMIUM OUTSTANDING)  (in Rs.)

 

 

FURTHER RESOLVED THAT the shares so allotted be issued in electronic form, in case any shareholder(s)desire(s) to have shares in electronic form and Mr_____, Chairman and Managing Director or Mr.___________, Director or Mr._______________ Company Secretary be and are hereby severally authorised to do necessary things in this regard.

 

RESOLVED FURTHER THAT the Share Certificate(s) for the shares so allotted be issued in physical form to the alottee who desires to have under the signature of Mr.__________, Chairman and Managing Director and  Mr.______________, Director  or Mr.________Director and Mr.___________  Company Secretary as authorised signatory and the common seal of the Company be  affixed on the share certificates in their presence.

 

RESOLVED FURTHER THAT Mr._____________Chairman and Managing Director and Mr._______________ Company Secretary be and is hereby severally authorized to append digital signature to the forms which are to be filed in this regard with Registrar of Companies, ......................

 

Dimple Malik

Email Id: csdimp...@gmail.com

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[CS Hariom Patidar]

SH-7 not required if convertiable shares within limit of authorised equity.

[Pragya Trivedi]

In case of compulsory convertible preference shares into equity, valuation report is required or not?

Please Suggest.

Thanks

[Khusbu Agarwal]

Valuation Report is required for issue of CCPS. 

Regards

Khusbu Agrawal

PCS and Registered Valuer

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Thanks & Regards

CS Khusbu Agrawal

Proprietor

Khusbu & Co.

FCS, MCOM and MJMC

IBBI Registered Valuer (SFA) and PCS

Mob: +917003255822

ICSI Unique Code: S2016WB431000

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[Pragya Trivedi]

Thank you for your reply.

Is it not required at the time of Conversion into equity?

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[CS Hariom Patidar]

At the time of issue you have taken and fixed all terms and conditions then not required.

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[Pragya Trivedi]

Thank You sir for your response.

If there are 1000 preference shares in a company @10 Each and fair market value of shares is 20 Rs. then we have to issue 1000 Equity shares @10 at 10 Rs. premium in exchange of preference shares.

Please correct me if I am wrong.

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