Issue cumulative convertible preference shares ?


1. See whether your company is a public limited company.

2. See that the object of issue of CCP shares by your public limited company is one of the following :

(a) determining of new projects.

(b) Diversification or Expansion of existing projects.

(c) Normal capital expenditure for modernization.

3. the quantum of the issue of CCP shares is to be the extent of your offering equity shares to the public for subscription.

4. If the project to be financed by the issue of CCP shares is also helped by any financial institutions then see that the quantum of the issue is approved by the concerned financial institutions.

5. The Articles of Association of your company include a provision for the issue of CCP shares, if not change Articles as per in the procedure on “Alteration of Articles of Association”.

6. See that the debt-equity ratio is 2:1 containing the issue of CCP shares.

7. The CCP shares are convertible into equity shares between the end of the years and five years.

8. The rate of dividend on CCP shares till they are converted into equity shares is not more than 10%.

9. The conversion of the CCP shares into equity shares would be consider as being one issuing from the procedure of redemption of liking shares out of the earnings of a new issue of shares made for the purpose of redemption.

10. The CCP shares will have voting rights as relevant to preference shares under the Act.

Issue cumulative convertible preference shares ?

11. If the CCP shares are to be issued on right basis fix the record date to describe the rights entitlements, and issue as notice.

12. Before issue of CCP shares, pass a special resolution.

13. The same special resolution approving the issue of CCP shares provide for compulsory conversion of the preference shares between the 3rd to 5th year.

14. Follow the guidelines for Issue of Cumulative Convertible Preference Shares.

15. Inform the CCP shareholders individually and through public notice, the conversion CCP shares into equity shares at appropriate time.

16. If your company is an existing listed company then also follow the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.



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