Practicing Success
Practicing Success
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| If redemption of debentures is made by Conversion Method, the amount to be transferred to ‘Debenture Redemption Reserve Account’ will be equal to what percent of converted amounted? |
20 40 60 Not required |
| Not required |
| No Debenture Redemption Reserve is required in case of convertible debentures because no funds are required for redemption. A company can redeem its debentures by converting them into shares or new class of debentures. If debenture holders find that the offer is beneficial to them, they can exercise their right of converting their debentures into shares or new class of debentures. These new shares or debentures can be issued at par, at a discount or at a premium. It should be noted that only the actual proceeds of debentures are to be taken into account for ascertaining the number of shares to be issued in lieu of the debentures to be converted. If debentures were originally issued at discount, the actual amount realised from them at the time of issue would be used as the basis for computing the actual number of shares to be issued. |
