Before it is converted, what does a fully convertible debenture represent in the hands of its holder under the Companies Act, 2013?
Question and options
Before it is converted, what does a fully convertible debenture represent in the hands of its holder under the Companies Act, 2013?
Share application money pending allotment
Preference share capital of the company
A debt owed by the company
Equity share capital of the company
Answer and explanation
Section 2(30) of the Companies Act, 2013 defines a debenture as an instrument evidencing a debt of the company, and section 71(1) allows debentures to carry an option to convert them into shares. Until conversion takes place, the holder is a creditor, not a shareholder, so the instrument is not share capital of either kind.
Practice for these exams
-
All India Bar Examination (AIBE)
Subject revision
See pack details on LawMint.net -
UGC NET Law
Subject revision
See pack details on LawMint.net -
IIT Kharagpur LL.M. Entrance
Subject revision
See pack details on LawMint.net -
CLAT PG
Subject revision for a passage-based exam
-
CUET PG Law (LL.M.)
Subject revision
-
AILET PG
Subject revision
-
Bihar Judicial Services
Subject revision
Related exam syllabi
More solved explanations in Share capital, debentures, transfer & buy-back
- As per the Companies Act, 2013, subscribed capital of a company is:
- The equity shares issued by a company to its directors or employees for making available intellectual property rights or for know-how are known as :
- Which of the following shares can be issued at discount?
- An ordinary share has a nominal value of ₹10. No statutory exception applies. Which issue price is prohibited by section 53 of the Companies Act, 2013?
- Under section 55(2) of the Companies Act, 2013, which condition must preference shares satisfy before they can be redeemed?