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Companies Act, 2013

Conversion of Debt or Loan into Securities (Listed Company)

Aakanksha Singhal Aakanksha Singhal
Aakanksha Singhal

Published on: Dec 14, 2020

Khushboo Sharma
Khushboo Sharma

Updated on: Sep 30, 2023

(18 Rating)
21092

Introduction

Company takes loan or debt on the terms that the loan or debt will be converted into share capital. This is one of the reliable modes to raise capital without immediate investments.

Mandatory Requirements: Shareholders’ approval by special resolution is required before taking of loan.

Following Procedure is to be followed

  • Before Issuing of Debentures or Taking Loan
    1. Convene a Meeting of Board of Directors [As per section 173 & SS-1]
    2. Filing of Form MGT-14 with ROC [Section 117]
      File Form MGT-14 with the ROC within 30 days of passing Board Resolution in the Board Meeting along with fee as specified in the Companies (Registration offices and fees) Rules, 2014 and requisite documents.
    3. Convene General Meeting [Section 96, 100 and SS-2]
    4. File Form MGT-14 with ROC
      File Form MGT-14 with the ROC within 30 days of passing Special Resolution in General Meeting along with fee as specified in the Companies (Registration offices and fees) Rules, 2014 and requisite documents.
  • At the time of Conversion of Debentures or Loan into Securities
    1. Convene a Meeting of Board of Directors [As per section 173 & SS-1]
    2. Filing of Form PAS-3 with ROC
      Company shall file return of allotment in Form PAS-3 with the Registrar of Companies within 30 days from the allotment of Share by the Company along with the fee and following documents as an attachment
      • A list of allottees stating their names, address, occupation, if any, and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the Form PAS-3 as being complete and correct as per the records of the company.
      • Certified True Copy of Board Resolution
      • Any Other documents as required.
    3. Intimation and Approvals
      • Company shall make an application for listing to the recognized stock exchange where shares are listed within 20 days of allotment.
      • On receiving the listing approval, apply to NSDL and CDSL for capital admission.
      • On Capital admission, apply to the Stock exchange for trading approval.

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