Partially Convertible Debenture - PCD

What Does Partially Convertible Debenture - PCD Mean? A type of convertible debenture, part of which will be redeemed by the issuing company after a specified period of time and part of which is convertible into equity or preference shares at the end of the specified period. The ratio of conversion for the partially convertible debenture is decided by the issuer when the debenture is issued. Investopedia explains Partially Convertible Debenture - PCD Any partial conversion will be optional at the hands of the debenture holder. Partially convertible debentures differ from fully convertible debentures, in which all of the instrument must be converted into equity. Read more: http://www.investopedia.com/terms/p/partially-convertibledebenture.asp#ixzz1YQZxzlvD

Wiki definition

Partly Convertible Debentures (PCD): A part of these instruments are converted into Equity shares in the future at notice of the issuer. The issuer decides the ratio for conversion. This is normally decided at the time of subscription.

Sebi Guidelines

Nonconvertible Debentures (NCDs) and Partly Convertible Debentures (PCDs) Debentures of less than 18 months Duration: If the maturity period of debentures is less than 18 months, it is hot necessary to create a charge or appoint a trustee or create a Debenture Redemption Reserve. If no charge is created on such debentures they are unsecured and are treated as "deposits". the issuer has to comply with the requirements of the Companies (Acceptance of Deposits) Rules, 1975. The otfer document should disclose this.

Prospectus and PCDs / NCDs: In the case of PCDs, the premium amount at the time of conversion shall be predetermined and stated in the prospectus. Redemption amount, period of maturity, yield on redemption of PCDs/NCDs

shall be indicated in the prospectus. The prospectus should indicate the discount on the nonconvertible portion of the PCD in case they are traded and the procedure for their purchase on spot trading basis must be stated in the prospectus.