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Stamp duty on compulsory convertible debenture

CS Sagar Khandelwal (Practice) (87 Points)

21 December 2011

Hi,

Can any one please advice on the stamp duty aspect for Issue of Compulsory Convertible Debenture Certificate in the State of Maharashtra and Andra Pradesh. (what stamp duty is applicable on CCD agreement and also on CCD Certificate and under what provision of law)

Thanks in Advance

Sagar R K

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CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 22 December 2011

Stamp duty will be differ between state to state.. Just consult with your local advocate or document writers..

An application proposing to pay consolidated stamp duty Under Section 10 of the Bombay Stamp Act, 1958 (hereinafter referred to as the "said Act") in respect of equity shares to be issued to the allottees of the Fully Convertible Debentures is to be made. stamp duty at the rate of 1% ad valorem under Article 17 of Schedule I to the said Act is required to be affixed.

SEBI Guidelines for Disclosure and Investor Protection - Clarification IV, dated 21-9-1992 is also to be taken care of while calculating the stamp duty. The relevant portion reads as under:-

"FCDs/PCDs convertible within 18 months are considered quasi-equity and, therefore, they are to be treated on par with equity. Long-term conversion after 18 months amounts to raising deferred equity. The guidelines also provide for promoters, contribution to the equity to the extent of minimum specified percentage by way of participation in FCDs/ PCDs with the same conversion price as applicable to public."