11/07/2018
TIME LIMIT OF CONVERSION OF COMPULSORY CONVERTIBLE DEBENTURE (CCD):
There is no such Time Limit mentioned in Section 71 of CA 2013 but from the interpretation of the Following Rules, it can be concluded i.e. 10 years.
1. Companies (Share Capital and Debenture) Rules, 2014 says: Date of its Redemption shall not exceed 10 years from the date of Issue. Further Section 71 of CA 2013 says: A company may issue debenture with an option to convert such debenture into shares at the time of redemption. Hence concluded i.e. Conversion within 10 years.
2. Companies (Acceptance of Deposits) Rules, 2014, I can conclude that CCD to be converted within 10 yrs of the issue.
NOW see the Rule:
Companies (Acceptance of Deposits) Rules, 2014 :
2 (c) "Deposit" includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include -
(ix) Any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company or bonds or debentures compulsorily convertible into shares of the company within [Ten years]:
Provided that if such bonds or debentures are secured by the charge of any assets referred to in Schedule 3rd of the Act, excluding intangible assets, the amount of such bonds or debentures shall not exceed the market value of such assets as assessed by a registered valuer.