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Get started with your business setup today. Ccds first became prominent in the foreign direct investment (“ fdi ”) context in 2007 when indian foreign exchange laws expressly recognized them as the only type of debentures that indian companies could issue to raise fdi What is compulsory convertible debentures
The term “compulsory convertible debentures” refers to a combination of two financial tools Introduction compulsorily convertible debentures (“ ccds ”), as the type suggests, are debentures that are compulsorily convertible into equity shares When companies need funds, they issue ccds to raise capital
These ccds work like regular loans initially, with the company paying fixed interest to the investors who hold them.
Compulsorily convertible debentures (ccds) are hybrid financial instruments that combine the characteristics of debt and equity These instruments are issued as debt securities but come with a mandatory provision to convert into equity shares after a predetermined period or upon meeting specified conditions. Compulsorily convertible debentures (ccds) are an important source of finance and are used by the companies for raising funds Simply put, ccds, as the name suggests, are debentures with an underlying characteristic of compulsory conversion into equity after a certain period of time, or on happening of a specified event
Ccds are different from simple debt instruments, as they include a. Discover how compulsory convertible debentures (ccds) work, their role as hybrid securities, and the benefits for investors and companies when converting debt to equity. Sebi icdr regulations treat both optionally convertible and compulsorily convertible debentures as specified securities covered by the regulations, however, in case of ccds, the parity with equity shares becomes evident.
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