If a company decides to issue 'Convertible Debentures', how does this instrument function within the Indian Capital Market framework, and what are the implications for the investors and the company?

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Economics · Economy

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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They give the holder the option or obligation to exchange the debentures for a fixed number of equity shares after a specified period.

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Answer 1

The interest paid on these debentures is not tax-deductible for the company, unlike interest on regular term loans.

Answer 2

They are issued only to Institutional Investors through Private Placement and cannot be traded on the National Stock Exchange.

Answer 3

They give the holder the option or obligation to exchange the debentures for a fixed number of equity shares after a specified period.

Answer 4

They are pure debt instruments that never convert into equity but offer a higher interest rate than standard bonds.

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