Summary: The process for converting Compulsory Convertible Debentures (CCD) into Equity shares or Convertible Cumulative Preference Shares (CCPS) involves several steps. First, the company must ensure that the Articles of Association permit conversion. The board must pass a resolution to approve the conversion and, if needed, an increase in authorized share capital. The company must obtain consent from all debenture holders for the conversion. Next, an Extraordinary General Meeting (EGM) is held, where shareholders must approve the increase in authorized share capital and the special resolution for conversion. Following this, e-Form MGT-14 must be filed with the Registrar of Companies (ROC) within 30 days. If there is an increase in authorized share capital, e-Form SH-7 must also be filed. The company must determine the conversion price with the help of a valuation report and prepare a letter of offer for the conversion. After obtaining consent from debenture holders, shares must be allotted within 12 months, with share certificates issued and the names added to the Register of Members. A return of allotment must be filed with the ROC in e-Form PAS-3 within 30 days, along with required documents. Finally, share certificates are issued to the holders, signed by two directors, in accordance with the Companies Act, 2013.
In pursuance to the provisions of the Companies Act, 2013, read with relevant rules made thereunder, the (the “Company”) is required to comply with the following requirements for conversion of Compulsory Convertible Debentures to Equity shares or CCPS:
1. Check whether the Articles of Association allows for conversion.
2. Hold Board Meeting and pass the Board Resolution for Conversion of CCD into Equity shares or CCPS and increase in authorised share capital of the Company, (if required) along with approving the notice of EGM for the approval of Shareholders of the Company.
3. The Company is required to obtain consent from all the debenture holders/CCD holders holding CCD’s/debentures as on the date of passing the above resolution, for conversion of CCD into Equity Shares or CCPS.
4. Hold EGM of the Shareholders of the Company and
- Pass Ordinary resolution for increasing the authorised share capital of the Company, (if required).
- Pass the Special Resolution for Conversion of Compulsory Convertible Debentures (CCD) into Equity shares or CCPS.
Further the notice of the EGM shall be annexed with an explanatory statement containing all the necessary information of Conversion.
5. Within a period of 30 days of passing a Special Resolution as above, the Company is required to file e-Form- MGT-14 with the Registrar of Companies (ROC).
6. In case the Company pass the resolution for increase in authorised capital, then the company is required to file e-Form SH-7 with the ROC for increase in authorised share capital of the Company within a period of 30 days from the date of passing the Ordinary resolution.
Further the following attachments are required to be attached with e-Form SH-7:
- Notice of EGM along with extract of resolution
- Extract of Board resolution
- Altered MOA
7. Determine the price for conversion of CCD to Equity after obtaining the valuation report by the registered valuer in accordance with the provisions of the Companies Act, 2013.
8. Prepare a letter of offer for conversion of CCD to Equity shares or CCPS.
9. The Letter of Offer is required to be sent to the holders of the compulsorily convertible debenture. It is the duty of the secretary to verify same consent sent by the debenture holders for the conversion.
10. The Company needs to ensure that the allotments of shares are completed within 12 months from the date of the passing of the special resolution. The share certificate is issued to holders and the names are entered in the Register of Members.
11. Within a period of 30 days of allotment of shares a return of allotment shall be filed with the ROC in e-Form PAS-3 in accordance with the provisions of section 39 of the Companies Act, 2013 read with the Companies (Prospectus and Allotment of Securities) Rules, 2014 along with list of allottees, a copy of the board of resolution, a copy of the special resolution and valuation report.
12. Post the allotment of shares the Company is required to prepare and issue share certificate in Form SH-1, signed by two Directors of the Company in accordance with section 46 of the Companies Act, 2013.
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