OFCD is a type of debt security where the option is given to the holder if he wants to convert his debenture into equity share after stipulated time .
This instrument does not yield interest in the initial period of say, 6 months. After this period option is given to the holder of OFCDs to apply for equity at a "premium" for which no additional amount needs to be paid. The option has to be indicated in the application form itself. However, interest on FCDs is payable at a determined rate from the date of first conversion to the second / final conversion and in lieu of it, equity shares are issued.
This instrument does not yield interest in the initial period of say, 6 months. After this period option is given to the holder of OFCDs to apply for equity at a "premium" for which no additional amount needs to be paid. The option has to be indicated in the application form itself. However, interest on FCDs is payable at a determined rate from the date of first conversion to the second / final conversion and in lieu of it, equity shares are issued.
SEBI recently charged the Sahara Group for disguising its prospectus for the OFCD issue as a draft red herring prospectus(DRHP), as it had contained the details of price and quantum of the issue amont other things.
What are the key differences between an OFCF and convertible notes
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