Case Study on Private Placement of Compulsorily Convertible Debentures
Compulsorily Convertible Debentures are debt instruments that are compulsorily converted into Equity shares of the Company at a future date or after a specified period or on the accomplishment of a pre-decided milestone at a predetermined price.
Private Placement as the name suggests means the offer of securities to certain specified individuals/institutions on a selective basis through Private Placement offer cum application letter rather than issue to the general public as in the case of public issue. The same is governed under section 42 of the Companies Act, 2013.
SimplyBiz has supported a client in the issuance of Compulsorily Convertible Debentures (CCD) through private placement. The client is engaged in the work of manufacturing dairy products. The Company had prospective investors who were ready to invest in the Company. We represented both investors and the Company. We supported them in the preparation of Term sheet, drafting of CCD agreements and corporate secretarial compliances under the Companies Act, 2013.
Our services involved the below-mentioned series of work:
The very first step per the client’s requirement was advisory and preparation of the “Term Sheet”. The term sheet is the basic non-binding document that defines the terms and conditions of the investment. We prepared the term sheet based on negotiation between the investor and the Company and also advised both the parties on their respective interest. We even helped the client in getting the term sheets signed digitally with no-hassles.
The next step was the preparation of the CCD agreement. It’s an agreement between the Issuer Company and the investors which binds their relationship and defines their roles, rights, obligations and responsibilities.
Thereafter approvals from the Board of director and members by way of Special resolution was obtained. All the necessary documents like Notices, Minutes, and Attendance sheets were prepared and shared with the clients for signatures. Draft PAS-4 (Private placement offer cum Application letter) was also simultaneously prepared
Form MGT-14 which is required to be filed with ROC to intimate approval of members for the issuance of CCD by way of special resolution was filed.
Once form MGT-14 was filed with ROC, then PAS-4 was signed and shared with the respective investors. PAS-4 contains all the required details with regard to the Company, Directors, financials and issue of CCD.
A separate bank account was opened to receive the subscription amount from the investors. The Amount received in the account cannot be utilized for any other purpose except towards the allotment of securities or for refund of excess money.
Once the subscription money was received from the investors, a Board meeting was conducted to take the approval of the directors for the allotment of the subscribed CCDs to the respective investors within 60 days of receipt of subscription money.
Thereafter, e-form PAS-3 was filed with the Registrar intimating the allotment of CCD along with Board resolution and list of allottees within 15 days of allotment.
Then the CCD certificates were signed, stamped and issued to the respective investors within the specified period of 60 days.
All these works were completed easily and in a timely manner adhering to all the compliance requirements as per provisions of the Act.
Conclusion: The client was happy with our services specifically, the way the whole process was conducted effectively through a digital process. We handled 3 Private Placements for the same client and the client expressed their desire to collaborate more in future. We have been doing similar work for various other clients across various industries and they have given similar feedback.
Click here to read the client testimonial –https://simplybiz.in/our-clients/
In case you’re looking for assistance in preparation of Term sheet, drafting of agreements and corporate secretarial compliance support for issuance and allotment of any shares/securities, then please get in touch with us.
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