Compulsory Convertible Debentures

CCDs are a type of debenture that must be converted into equity shares of the issuing company after a specified period or upon the occurrence of certain events. Unlike optionally convertible debentures, the conversion of CCDs is mandatory, and the terms of conversion, such as ratio and timing, are defined at the time of issue.

In essence, CCDs provide the investor with fixed interest payments like any other debt instrument, but instead of repaying the principal in cash, the company issues shares in the future.

Compulsory Convertible Debentures (CCDs) are one of the sources for raising funds for the corporate sector. CCDs are a type of security that gives holders the option to convert their debentures into a fixed number of equity shares after a specified date.

Raising funds through equity would dilute the stake in the company, whereas the debt will carry a huge rate of interest. Thus, the other alternative is the issuance of Compulsory Convertible debentures [‘CCDs’], which can be c