Classification of preference shares as equity or debt determines foreign investment treatment and ECB applicability. Preference shares that are fully and mandatorily convertible into equity within a specified time are treated as part of share capital and included in foreign equity calculations for sectoral caps. Non convertible, optionally convertible or partially convertible preference shares are treated as debt and must conform to External Commercial Borrowing guidelines and caps, encompassing eligible borrowers and lenders, amount and maturity limits, end use stipulations, and rupee interest rate norms for ECBs. Preference instruments issued on or before the cutoff date may continue until current maturity, subject to RBI/SEBI and statutory requirements.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Classification of preference shares as equity or debt determines foreign investment treatment and ECB applicability.
Preference shares that are fully and mandatorily convertible into equity within a specified time are treated as part of share capital and included in foreign equity calculations for sectoral caps. Non convertible, optionally convertible or partially convertible preference shares are treated as debt and must conform to External Commercial Borrowing guidelines and caps, encompassing eligible borrowers and lenders, amount and maturity limits, end use stipulations, and rupee interest rate norms for ECBs. Preference instruments issued on or before the cutoff date may continue until current maturity, subject to RBI/SEBI and statutory requirements.
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