Streamlined CCD (COMPULSORILY CONVERTIBLE DEBENTURES) ISSUANCE · Legal Advisory
Streamlined CCD (COMPULSORILY CONVERTIBLE DEBENTURES) ISSUANCE · Legal Advisory
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Our team reaches out to understand your precise requirements.
Drafting Review
We prepare all necessary paperwork specific to your legal needs.
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Filing and rigorous follow-up with the respective authorities.
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Here's What You'll Need
💬 TAGLINE
- Document Name
- Notes / Format
- Document Name
- Notes / Format
- Certificate of Incorporation and MoA/AoA
- Company registration documents - required for CCD issuance documentation · PDF
- Current Cap Table
- Existing shareholding structure including all outstanding equity, CCPS, CCDs, and other convertible instruments
- Investor's Term Sheet (if any)
- Any term sheet or investment letter from the investor specifying the CCD terms · PDF
- Board and Shareholder Resolution Records
- Existing board meeting minutes and shareholder resolution records - for procedural consistency
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Overview - ccd compulsorily convertible debentures issuance legal advisory Registration
What is it?
Compulsorily Convertible Debentures (CCDs) are debt instruments that mandatorily convert into equity shares at a future date or upon a trigger event - such as the next priced funding round or a specified date. Under FEMA's FDI Policy, CCDs are treated as equity (not debt) because of their mandatory conversion - making them the preferred instrument for foreign investment in Indian startups.
Why CCDs are used for foreign investment
Under FEMA's FDI regulations, CCDs are classified as 'equity instruments' - because they will necessarily convert to equity. This means: (a) they are permitted for FDI under the automatic route (in permissible sectors), (b) they don't attract RBI's ECB (External Commercial Borrowings) regulations, and (c) they are treated as part of the company's equity capital for all purposes.
CCD vs. convertible note vs. CCPS
CCD: Mandatorily convertible debenture - treated as FDI equity. CCPS (Compulsorily Convertible Preference Shares): Preference shares that mandatorily convert - also FDI equity. Convertible Note: Typically structured as optionally convertible - may be treated as ECB under FEMA, which has stricter regulations. For foreign investors, CCDs and CCPS are the safer instruments.
Key CCD terms
Face value and coupon rate (interest paid until conversion), conversion ratio (how many equity shares per CCD), conversion trigger (date, event, or next round), conversion price or formula (typically based on next round pricing), anti-dilution protection, information rights during the debenture period, and security (if any).
Benefits - Benefits of Company Registration Online Using Lawxygen
Who Usually Requires This?
The CCD (COMPULSORILY CONVERTIBLE DEBENTURES) ISSUANCE · Legal Advisory solution matches perfectly with these profiles:
- Profile
- Why It Applies
- Profile
- Why It Applies
- Startups raising seed or pre-Series A capital from foreign investors
- CCDs are the most common instrument used by foreign angel investors and seed-stage VCs investing in Indian startups - they provide the valuation flexibility of a convertible instrument while complying with FEMA's FDI requirements.
- Indian companies accepting investment from NRI investors
- NRI investment in Indian startups is treated as FDI under FEMA (for NRIs investing on a non-repatriation basis, it is treated as domestic investment). CCDs are a common instrument for NRI angel investments.
- Companies that want to defer equity valuation until a future priced round
- When the company's current valuation is difficult to determine, CCDs allow the investment to be made now with conversion at a valuation determined in the future (typically at a discount to the next equity round).
- Companies issuing debentures to domestic investors as a debt-linked investment
- For domestic investors who want a debt-like instrument with equity upside, CCDs provide interest payments during the debenture period plus mandatory conversion to equity - offering the best of both worlds.
- Companies with existing foreign investors restructuring their instruments
- Companies restructuring existing CCPS or convertible notes into CCDs for FEMA compliance, or renegotiating conversion terms in anticipation of a new funding round, require CCD documentation and regulatory compliance advisory.
- ✅ WHY DO YOU NEED THIS
- Key Benefit
- Explanation
- Key Benefit
- Explanation
- FEMA-Compliant - No ECB Restrictions on Foreign Investment
- CCDs are treated as FDI equity under FEMA - they are not subject to the ECB (External Commercial Borrowings) regulations that restrict foreign debt investment in Indian companies. This makes CCDs significantly simpler to use for foreign investment than conventional convertible notes.
- Valuation Flexibility for Early-Stage Companies
- CCDs allow foreign investment at an early stage without agreeing on a precise company valuation - the conversion price is determined at the next priced round, at a discount to the round price. This is the startup-friendly structure that enables early investment without valuation disputes.
- Coupon Income Provides Investor Returns During the Pre-Conversion Period
- Unlike equity shares (which only return value on exit), CCDs pay interest (coupon) to the investor until conversion - providing a regular return during the debenture period that compensates for the deferred equity valuation.
- MCA and RBI Compliance Creates a Clean Legal Record
- Properly issued CCDs require Board approval, shareholder approval (for foreign investors), MCA filings (Form PAS-3, CHG-9 for charge creation), and RBI filing (FC-GPR upon conversion). Our end-to-end service ensures full compliance.
- PROCESS
- Step Name
- What Happens
- Timeline
- Step 1
- Structuring Advisory
- formula, coupon rate, information rights, and anti-dilution - ensuring the structure is FEMA-compliant and commercially aligned with both parties' interests.
- Days 1–3
- Step 2
- Documentation
- We draft the CCD Subscription Agreement (or Debenture Trust Deed), Debenture Certificate, Board and Shareholder Resolutions, and all ancillary documents required for the issuance.
- Days 3–7
- Step 3
- Corporate Approvals
- We prepare and file Board Resolutions under Section 179, Special Resolution under Section 62 (for issue to new investors), and related ROC filings - including Form PAS-3 within 30 days of allotment.
- Days 5–15
- Step 4
- RBI Compliance
- For foreign investors: we file Form FC-GPR with RBI on the FIRMS portal within 30 days of receipt of consideration - and manage all subsequent conversion reporting.
- Days 15–45
How It Works
Execution is straightforward. Hand over the details and relax.
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Data Preparation
Our agents format the forms via robust checks.
Execution
Final approvals fetched from the regulating authorities.
Expected Additional Levies
- Filing Fees to Government
- E-Stamp Duties according to state norms
- Processing Levies based on capital limits
Core Advantages to Remember
Avoid Penalties
Better Market Position
Standardized Documentation