The Companies Act, 2013
CHAPTER IV: SHARE CAPITAL AND DEBENTURES
Section 71: Debentures
Bare Act
(1) A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption: Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting.
(2) No company shall issue any debentures carrying any voting rights.
(3) Secured debentures may be issued by a company subject to such terms and conditions as may be prescribed.
(4)… Read the complete text with KanoonGPT Pro.
Simplified Act
(1) A company can sell bonds to investors that can be turned into company shares later, either fully or partially when those bonds are due to be paid back. But, this needs to be agreed upon by a majority vote at a shareholders' meeting.
(2) Companies are not allowed to sell bonds that give the bondholder v… Read the complete text with KanoonGPT Pro.
Explanation using examples
Imagine XYZ Ltd. wants to raise capital for expanding its operations. Instead of issuing only shares, the company decides to issue debentures with a feature that allows investors to convert these debentures into shares… Read the complete text with KanoonGPT Pro.
