XIII-19
1.
Call a Board Meeting to consider the terms and conditions of the
Debentures or Loans giving option for conversion into shares and the number of
debenture holders who have exercised the option.
2.
Such issue of shares caused by the exercise of an option attached to
debentures issued or loans raised by the company need not comply with the
provisions of section 81 provided their issue complied with the following
conditions:--
i)
The
issue had been made with the previous approval of the Central Government; or
ii)
the
issue conforms to the following conditions of rule 3 of the Public Companies
(Terms of Issue of Debentures and of raising of Loans with option to Convert
such Debentures or Loans into Shares) Rules, 1977:--
a)
if
the debentures or loans are issued or raised either through private
subscription or through the issue of a prospectus to the public;
b)
a
public financial institution either underwrites or subscribes to or sanctions
the whole or part of the issue of such debentures or loans;
iii)
Having
regard to the financial position of the company, the terms of issue of the
debentures or the terms of the loans, the rate of interest payable on them, the
capital of the company, its loans, liabilities, its reserves, its profits
during the immediate five years and the current market price of the shares of
the company, the financial institutions provide for a term that an option will
be there to convert those debentures or loans or any part thereof into shares in
the company or to subscribe for shares therein either at par or at a premium
not exceeding twenty five per cent of the face value of the shares.
3.
If the issue was made to or loans obtained from any person other than
the Government or any institution specified by it then in addition to complying
with either of the requirements mentioned in above item 2, the issue had been
approved by a Special Resolution before it was made.
4.
Where the option to convert has been exercised, call a Board Meeting
and allot shares, on conversion of debentures or loans.
5.
File the Return of Allotment with the Registrar of Companies within
thirty days of such allotment in form No.2 after paying the requisite fee prescribed under Schedule X to the
Companies Act, 1956 and in accordance with rule 22(1) of the Companies General
Rules & Forms, 1956.
6.
The share certificates to be issued conversion of debentures shall be,
as far as possible, in marketable lots and, in respect of the balance, in
denominations of 1-2-5-10-20-50 shares[Clarification VII, dated 10-8-1993
issued by SEBI]