Convertible debentures cannot be issued at a discount if:

They are to be immediately converted

The correct answer is option 2- They are to be immediately converted.

Convertible debentures cannot be issued at a discount if they are to be immediately converted.

Under Indian securities law and SEBI regulations, convertible debentures cannot be issued at a discount if they are to be immediately converted into equity shares. This is to prevent circumvention of rules related to the minimum issue price of equity shares, which are governed by SEBI to protect investor interests and ensure fair valuation.