ARE 'OPTIONALLY FULLY CONVERTIBLE DEBENTURES' DEBT UNDER SARFAESI ACT, 2002
Optionally Fully Convertible Debentures (OFCDs) are kinds of debt instruments; they are a hybrid instrument, as the investor has the option to convert this debt into equity (shares) of the issuing company after a specified period and at a predetermined price. DO OFCDs CONSTITUTE DEBT AS PER SARFAESI Act, 2002. In SARFAESI the Meaning of ‘Debt’ as per section 2(1)(ha) of SARFAESI Act, is ‘debt’ shall have the meaning assigned to it in section 2(g) of RDB Act, 1993 and includes: (i) unpaid portion of purchase price of any tangible asset given on hire or financial lease or conditional sale or any other manner (ii) any right, title or interest on any intangible asset or licence or assignment of such intangible asset, which secures the obligation to pay any unpaid portion of the purchase price of such intangible asset or an obligation incurred or credit otherwise extended to enable any borrower to acquire the intangible asset or obtain licence of such asset. and the Meaning of D...