conversion of Comp convertible debentures into shares (urgent)

[Suganyaa Kesavan]

Dear All

Please clarify:

We have issued fully compulsorily convertible debentures. The terms of the issue is such that they are convertible into equity shares and the conversion rate is mentioned in the terms as well. Is it possible to convert these debentures into preference shares now?

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Thanks & Regards
K.Suganyaa

[Madhwesh K]

Dear Suganyaa,

 

Please note that at the time of issue of such fully convertible debentures, the terms should have been approved by:

 

1. The debenture holders

 

2. Issuer company's Board

 

3. Issuer company's members u/s 81(1A) of Companies Act 1956

 

4. Approval of stock exchanges under listing agreement (in case of listed companies)

 

If such terms involves conversion either to equity shares or preference shares, then such conversion can be made into preference shares.

 

If the terms covers only equity shares, then such conversion into preference shares cannot be made, because it will be an action without any authority (i.e., the authority was there only for equity shares)

 

However, taking all the aforesaid approvals again, the terms can be changed and conversion be made.

 

Member's views solicited.

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Thanks and Regards,

Madhwesh K

Practicing Company Secretary

9980672126

#180, 31st Cross,

Jayanagar 4th T Block,

Bangalore - 11

[Suganyaa Kesavan]

Dear Madhwesh

Thanks for your immediate response and guidance.

Regards
Suganyaa.K

Thanks & Regards
K.Suganyaa

[Suganyaa Kesavan]

Can anyone provide me the format of the resolution to obtain the shareholders' approval to modify the terms of the earlier issue of FCDs.

[Suganyaa Kesavan]

Please also explain whether any FEMA issues are involved if we modify the terms of the debentures in case of Foreign investors and whether any reporting needs to be done to RBI?

Appreciate your valuable guidance in this regard.