How do I sell non-convertible debentures?

Since NCDs are listed on the stock market they can be sold in the secondary market. Bank FDs attract TDS if gains are beyond Rs. 10,000. Tax implications do apply on NCDs, capital gains need to be paid on the interest earned.

Can Debenture be converted into shares?

The debenture can typically only be converted into stock after a predetermined time, as specified in the bond’s offering. A convertible debenture will usually return a lower interest rate since the debt holder has the option to convert the loan to stock, which is to the investors’ benefit.

Can we sell debentures in open market?

Yes a company if authorised by its Articles of Association can purchase its own debentures in the open market.

Is it safe to invest in non-convertible debentures?

Investors must remember NCDs carry a higher credit and liquidity risk than bank deposits. Experts suggest going for secured NCDs to reduce the risk significantly in case of a complete default. Also, allocation should not be over 10\% of one’s fixed income portfolio.

How do you encash a debenture?

Methods of Redemption of Debentures

1. Lump-sum payment on a prefixed date. This one-time method is considered to be among the simplest redeeming options.
2. Payment in annual instalment.
3. Debenture redemption reserve.
4. Call and put option.
5. Conversion into shares.
6. Buy from the open market.

Can NCD be traded?

Easily Tradable NCD investment are listed on the open stock markets and exchanges. Direct Bank Credit Interest on NCD investment is paid by a direct bank credit. Digitalised Issuance and Trading of NCD investment is in the demat form only. Lower Risk Only companies with a good credit rating can issue secured NCDs.

How do you convert shares to debentures?

Procedure of converting debentures into shares

1. Articles of Association of the Company should allow for Conversion option.
2. Hold Board Meeting and pass the Board Resolution for Conversion of CCD into Equity Shares along with approving Notice of Genernal Meeting for the approval of Shareholders of the Company.

What is redemption by conversion?

When a debenture holder can convert his/her debentures into shares or new debentures after the expiry of a specified period of time, then it is known as redemption of debentures by conversion.

Can debentures be redeemed out of capital?

Debentures may be redeemed out of capital or out of profits. They set aside a certain sum of money out of profits every year and invest an equivalent amount in first class securities so that necessary funds are available for redemption of debentures at the appropriate time.

Is income from NCD taxable?

Interest on NCD is taxed under head ‘other sources’ at applicable slab rates, paid periodically or cumulatively. Interest is not subject to tax deduction at source if NCDs are held in dematerialised form and are listed on a stock exchange. Profit on sale/ redemption of NCDs has to be offered to tax as ‘Capital Gains’.