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About this agreement

Title: Resolution for Issue of Non-Convertible Debentures with Equity Warrants on Rights Basis Format

Are you a company in India looking to raise capital efficiently through a rights issue of non-convertible debentures (NCDs) attached with equity warrants? Our Resolution for Issue of Non-Convertible Debentures with Equity Warrants on Rights Basis Format provides a ready-to-use, customizable legal template in PDF/Word format, ensuring compliance with the Companies Act, 2013, and SEBI regulations.

What is a Resolution for Issue of Non-Convertible Debentures with Equity Warrants on Rights Basis?

A Resolution for Issue of Non-Convertible Debentures with Equity Warrants on Rights Basis is a formal board resolution passed by the directors of a company to approve the issuance of NCDs bundled with equity warrants to its existing shareholders on a rights basis. This instrument allows companies to raise funds without diluting immediate equity, as NCDs are debt instruments that pay interest, while equity warrants give shareholders the option to convert into equity shares later at a predetermined price.

Under Section 71 of the Companies Act, 2013, and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, such resolutions are crucial for public and private companies seeking alternative financing. This Resolution Format outlines the terms of the issue, including size, tenure, interest rate, warrant conversion details, and rights entitlement ratio, making it a vital document for corporate fundraising.

Why is it Important?

This resolution ensures legal compliance and protects the company's interests while offering shareholders preferential rights to subscribe. It minimizes regulatory risks, facilitates smooth board approval, and paves the way for shareholder resolutions if needed. In India's competitive market, using a standardized Resolution for Issue of Non-Convertible Debentures with Equity Warrants on Rights Basis Format saves time, reduces legal costs, and boosts investor confidence. Non-compliance can lead to penalties under the Companies Act or delays in fundraising, making this template indispensable for timely capital infusion.

Key Elements of the Resolution Format

Our professional legal template includes all essential sections:

Recitals/Preamble: Background on the company's financial needs and board authority.
Approval Clause: Authorization for issuing NCDs with equity warrants on rights basis.
Terms of Issue: Details like issue size, face value, interest rate, redemption schedule, warrant exercise price, and lock-in periods.
Rights Entitlement: Ratio for existing shareholders (e.g., 1:1 or as specified).
Compliance References: Mentions to Companies Act, SEBI guidelines, and listing requirements.
Delegation of Authority: Powers to officials for execution, filing with ROC/Stock Exchanges.
Closing Provisions: Date, place, and signatures.

This ready-to-use format is drafted by legal experts, ensuring it's court-ready and adaptable to your company's specifics.

Who Should Use This Format?

Ideal for:

Listed and unlisted public companies under Companies Act, 2013.
Private companies expanding operations via debt-equity hybrids.
Businesses in manufacturing, real estate, infrastructure, or tech sectors needing non-dilutive funding.
Company secretaries and legal teams handling rights issues.

Common use cases include bridging working capital gaps, funding expansions, or refinancing high-cost debt in India's dynamic economy.

Download Your Customizable Resolution Format Now

Get instant access to our Resolution for Issue of Non-Convertible Debentures with Equity Warrants on Rights Basis Sample in editable Word/PDF format. Free download available for preview, with premium customizable options for just a nominal fee. Tailor it to your needs, print, and file with the Registrar of Companies (ROC) confidently.

Important Note: While this legal template is designed for convenience and compliance in India, it is not a substitute for professional legal advice. Consult a qualified company secretary or lawyer to customize for your specific situation. Explore related formats like Shareholder Resolution for Rights Issue, Debenture Trust Deed, or Board Resolution for Bonus Issue for comprehensive corporate governance solutions.

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RESOLUTION FOR ISSUE OF NON-CONVERTIBLE DEBENTURES WITH EQUITY WARRANTS ON RIGHTS BASIS

Non-Judicial

RESOLUTION FOR ISSUE OF NON-CONVERTIBLE DEBENTURES WITH EQUITY WARRANTS ON RIGHTS BASIS

RESOLVED that:

(1) Subject to the guidelines issued by the Securities and Exchange Board of India (SEBI) and subject to such changes as may be suggested by SEBI and accepted by the company and subject also to other consents, permissions and sanctions as may be necessary and subject to such conditions, if any, as may be laid down by the SEBI or any other authority(ies), consent and approval of the company be and is hereby accorded under proviso (b) to section 811(3)(b)(ii) of the Companies Act, 1956 and other applicable provisions, if any, of the Companies Act, 1956 to the board of directors of the company to make an issue of???.redeemable non-convertible/secu red debentures (hereinafter referred to as "debentures") of the face value of Rs. 100 each for cash at par, with two detachable tradeable warrants entitling the holder thereof - not being earlier than a period of 36 months from the date of allotment and not later than 60 months from the date of allotment as may be decided by the board of directors - to two equity shares of Rs. 10 each at a price not exceeding Rs???.per such share i.e. face value of Rs. 10 plus premium of Rs???. per share in the manner specified below:

(a) ???.debentures of the face value of Rs. 100 each for Rs. cash at par with 2 (two) detachable tradeable warrants,* on 'Rights' basis to the members of the Company whose names will appear in the register of members of the company on such date as the board of directors may determine in the proportion of ???.such debentures for every???.equity shares of Rs. 10 each held by such members as on the date aforesaid.

*(Maximum price of equity share arising out of each of the Detachable Tradeable Warrant not to exceed Rs ???.) ???.

(b) ???.debentures of the face value of Rs. 100 each for cash at par with 2 (two) Detachable Tradeable Warrants* to be offered to the employees of the company (including Indian working directors) and workers in the permanent employment of the company on a date to be determined by the board of directors, on an equitable basis.

*(Maximum price of equity share arising out of each of the Detachable Tradeable Warrant not to exceed Rs???.per such share). ..........

(c) ???.debentures of the face value of Rs. 100 each for cash at par with 2 (two) Detachable Tradeable Warrants* to be offered to group/associate companies on preferential basis.

*(Maximum price of equity share arising out of each of the Detachable Tradeable Warrant not to exceed Rs ???.per such share).

Total:

(2) The amount of Rs. 100 per debenture be called from the applicants of the debentures in such manner as the board of directors may decide.

(3) In respect of the ???.debentures to be offered on 'Rights' basis to the existing equity shareholders of the Company in the proportion of???.as mentioned in (a) hereinabove, no fractional coupons will be issued but all those existing equity shareholders whose existing equity shareholdings will not be or in multiples of ???.and therefore who will be entitled to fractions, will be given preferential allotment of 1 (one) additional debenture (with two Detachable Tradeable Warrants), if and only if such shareholders accept the rights debentures offered to them in full and apply for any additional debentures. All those equity shareholders holding less than 5 existing equity shares will be entitled to a minimum offer of 1 debenture and such shareholders will also be entitled to the preferential allotment of 1 debenture as aforesaid.

(4) The board of directors of the company be and is hereby authorised to re-fix the entitlement of the said debentures in the event of any modification or variation made by the SEBI or other authorities and/or if deemed fit and proper by the board of directors.

(5) The unoffered / unsubscribed portion, if any, of the abovementioned issue will be disposed off by the board of directors, in such manner as it may deem fit and the board of directors is hereby empowered and authorised accordingly; provided that unsubscribed portion, if any, of the said ???.debentures offered to the employees (including Indian working directors) and workers in the permanent employment of the company may be offered to financial/investment institutions, banks or mutual funds or in such manner as may be permitted under the requisite approvals.

(6) The said debentures will carry interest at such rate as may be determined by the board at the time of the issue of the debentures. The interest shall be paid half-yearly on 31st March and 30th September every year until redemption of the debentures. The first payment of interest will be made from the date of allotment till the first due date following the date of allotment.

(7) The debentures will be redeemed at a premium of five per cent in three equal instalments at the expiry of sixth, seventh and eighth year from the date of allotment and such premium on redemption will be payable with the redemption instalment due at the end of the seventh year.

(8) Two Detachable Tradeable Warrants shall be attached to every debenture which will entitle the holder thereof not earlier than 36 months from the date of allotment and not later than 60 months from the date of allotment as may be decided by the board of directors to a right to apply for and get allotted one equity share of Rs. 10 per such Detachable Tradeable Warrant at a price not exceeding Rs. 60 per share, to be decided and declared by the board of directors.

(9) The board of directors be and is hereby authorised to determine and notify a record date and also the period within which the warrant holder should apply for the equity shares to enable the holders for the time being of the Detachable Tradeable Warrants to exercise the right to apply for the equity shares against such warrants held by them. The warrant holder may apply for the equity share(s) by paying to the company the value thereof as may then be determined by the board of directors provided that no amount of the debenture value will be adjustable towards the value of such equity share(s) to be applied for and allotted.

(10) If the right attached to any Detachable Tradeable Warrant is not exercised within the period as may be determined by the board of directors for that purpose, the equity shares against such outstanding warrants not applied for shall be disposed off by the board of directors of the company in its absolute discretion.

(11)(a) In the event of any issue of bonus shares by the company before the allotment of equity shares against Detachable Tradeable Warrants, the respective entitlement to equity share(s) of the warrant holder shall stand augmented in the same proportion in which the bonus shares may be issued.

(b) In the event of an increase in the subscribed capital of the, company by way of rights issue of securities before the exercise of right against warrants, the warrant holders may also be offered either securities or further warrants as may then be determined by the board of directors.

(12) 'The equity shares to be issued against Detachable Tradeable Warrants as aforesaid, shall rank pari passu in all respects with the existing fully paid equity shares of the company save and except that Such equity shares shall be entitled to such dividend, as may be declared any time after the allotment of the equity shares as aforesaid, on the amount paid up towards the face value, on pro rata basis and the de bent u res/warrants/ equity shares shall Ibe subject to the memorandum and articles of association of the Company.

(13) The Detachable Tradeable Warrants until they are exchanged for the equity shares will riot confer on the holders thereof any right to any dividend, interest, bonus or other benefits applicable to the equity shareholders/debenture holders nor will such warrant holders will have any right to attend and vote at any meetings of the shareholders' and debenture holders; warrant holder will also not be entitled to receive from the company any notice, or annual reports which may be meant for the equity shareholders/ debenture holders, debenture trustees, etc.

(14) The offer, of the debentures in terms of the foregoing resolutions be issued on the terms and conditions which the board of directors be and is hereby authorised to finalise and wherever deemed fit in consultation with any authority.

(15) The board of directors of the company be and is hereby authorised to issue and allot such number of equity shares as may be required to be issued and allotted to the holders of warrants in terms of the issue of debentures under the authority of the consent and approval given hereby.

(16) The board of directors of the company be and is hereby authorised, in its discretion to accept such conditions and modifications, as may be prescribed by SEBI or any other authority while according their sanction or consent to the proposed issue of the said debentures and take such consequential action thereon including the authority to revise/adjust the value/quantum of debentures or any portion thereof in such manner as may be beneficial to the company, in the event of such variation being considered expedient.

(17) For the purpose of giving effect to this resolution, the board of directors of the company be and is hereby authorised to do all such acts, deeds, matters and things as it may in its discretion, deem necessary or desirable and to settle any question, difficulty or doubt that may arise, in regard to the offer, issue and allotment of the said debentures as it may think fit.

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Important Guidelines

Guidelines for Drafting Resolution for Issue of Non-Convertible Debentures with Equity Warrants on Rights Basis:

When drafting a resolution for the issuance of non-convertible debentures with equity warrants on rights basis, adhere to these guidelines:

Clarity in Purpose: Clearly state the purpose of the resolution, specifying the issuance of non-convertible debentures and equity warrants on rights basis. Define the objectives, such as raising capital for specific projects.

Terms and Conditions: Outline the terms and conditions of the non-convertible debentures, including the interest rate, redemption terms, and any covenants. Specify the exercise price, tenure, and conditions of the equity warrants.

Rights Entitlement: Clearly define the rights entitlement process for existing shareholders, including the ratio of non-convertible debentures and equity warrants based on their shareholding.

Regulatory Compliance: Ensure compliance with relevant regulatory requirements and corporate governance principles governing the issuance of securities. Adhere to the guidelines provided by the regulatory authorities.

Common Mistakes to Avoid:

Incomplete Information: Provide comprehensive details regarding the terms of the debentures, equity warrants, and the rights entitlement process. Incomplete information may lead to misunderstandings.

Non-Compliance: Thoroughly review and comply with legal and regulatory requirements. Failure to adhere to these may result in legal complications and the rejection of the resolution.

Ambiguous Language: Avoid using ambiguous language that may lead to misinterpretation. Clearly articulate the terms and conditions to prevent confusion among shareholders.

Failure to Obtain Shareholder Approval: If required by law or the company's articles of association, ensure that the resolution receives the necessary approval from shareholders before implementation.

By following these guidelines and avoiding common mistakes, the resolution for the issue of non-convertible debentures with equity warrants becomes a well-defined and legally compliant document, facilitating the company's capital-raising activities.

Frequently asked questions

What is the purpose of the Resolution for Issue of Non-Convertible Debentures with Equity Warrants on Rights Basis?→

This board resolution authorizes a company to issue non-convertible debentures (NCDs) attached with equity warrants to existing shareholders on a rights basis, helping raise funds while complying with Companies Act, 2013 in India.

Is this resolution legally valid for use in India?→

Yes, this template is drafted per Companies Act, 2013 and SEBI regulations for rights issues or private placements of NCDs in India. Always consult a legal expert for your specific case.

Does this resolution require stamp duty or registration in India?→

Board resolutions like this typically do not require stamp duty in most Indian states or registration with ROC, but check local laws and company bylaws for confirmation.

In what format can I download this resolution template?→

Download this legal agreement in editable Microsoft Word or PDF format for easy customization, printing, and use in India.

Can I customize or edit this Resolution for Issue of Non-Convertible Debentures?→

Yes, the Word version is fully customizable to fit your company's details, issuance terms, and compliance needs under Indian laws.

When and who should use this resolution for issuing NCDs with equity warrants?→

Indian companies (private or public) planning a rights issue of non-convertible debentures with equity warrants to shareholders should pass this resolution in a board meeting.