Question

State True/False with reasons:
All types of debentures are eligible for conversion into equity shares.

• A. True
• B. False

Answer 1

The correct option is B False

(i) There are different types of debentures such as Registered and bearer debentures, secured and unsecured debentures, Redeemable and Irredeemable debentures, convertible and non- convertible debentures.
(ii) Debentures can be converted into equity shares if it happens to be convertible debenture.
(iii) In case of fully convertible debentures, entire face value is converted into equity shares at the expiry of certain period.
(iv) The period after which conversion is made is mentioned at the time of issue.
(v) After the debenture holder becomes an equity shareholder, his name is entered in Register of shareholders and is cancelled from the Register of Debenture holders.
(vi) So only convertible debentures and not all types of debentures are eligible for conversion into equity shares.