Debenture Convert For Free

When a debenture holder can convert his/her debentures into shares or new debentures after the expiry of a specified period of time, then it is known as redemption of debentures by conversion.

The debentures which cannot be converted into equity shares are called as non-convertible debentures.

A convertible debenture can be transformed into equity shares after a specific period. The option of converting debentures into equity shares lies with the holder. A convertible debenture will provide regular interest income via coupon payments and repayment of the principal amount at maturity.

A convertible debenture is defined as one of the types of loan which is issued by a company that can be converted into a stock. In Compulsorily convertible debenture the cost of the debenture is converted into an equity share within a fixed period of time. It is also known as CCD.

As per SEBI guidelines, the conditions of the creation of DRR (Debenture Redemption Reserve) do not apply to the conversion method. The debenture holders have the option to convert their debentures in the case when the conversion is to be made at or after 18 months but before 36 months of allotment.

Redemption of Debentures by Conversion into Shares or New Debentures: Companies usually redeem their debentures in cash; however, sometimes they give an option to debenture holders that their debentures will be converted into shares or redeemed. These types of debentures are known as Convertible Debentures.

The debentures that can be converted into equity shares within a specified period of time are known as convertible debentures.

Typically, a convertible debenture is issued by a company and can be converted into equity shares eventually. Notably, the decision to convert debentures into equity shares lay with shareholders, and they are treated as the creditor or lender.

Preference sharesalso referred to as preferred sharesare an equity instrument known for giving owners preferential rights in the event of a dividend payment or liquidation by the underlying company. A debenture is a debt security issued by a corporation or government entity that is not secured by an asset.

A convertible bond is a fixed-income corporate debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares. The conversion from the bond to stock can be done at certain times during the bond's life and is usually at the discretion of the bondholder.