Shiv Shakti Ltd. issued 20,000, 13%, Convertible Debentures of ₹ 100 each on 1st April, 2024. The debentures are due for redemption on 1st July, 2024. The terms of issue of debentures provided that they were redeemable a

CS Executive · Corporate Accounting and Financial Management · PYQS · June 2025
Shiv Shakti Ltd. issued 20,000, 13%, Convertible Debentures of ₹ 100 each on 1st April, 2024. The debentures are due for redemption on 1st July, 2024. The terms of issue of debentures provided that they were redeemable at a premium of 5% and also conferred an option to the debentureholders to convert 20% of their holding into equity shares having a nominal value of ₹ 10 per share at a price of ₹ 15 per share. Debentureholders holding 2,500 debentures did not exercise the option. Calculate the number of equity shares to be allotted to the Debentureholders exercising the option to the maximum.

Answer & Explanation:

Calculation of number of Equity Shares to be allotted Particulars Number of Debentures Total number of debentures 20,000 Less: Debenture holders not opted for conversion (2,500) Debenture holders opted for conversion 17,500 Option for conversion 20% Number of debentures to be converted (20% of 17,500) 3,500 Redemption value of 3,500 debentures at a premium of 5% [3,500 × (₹ 100 + ₹ 5)] = ₹ 3,67,500 Equity Shares of ₹ 10 each issued on conversion at a price of ₹ 15 [₹ 3,67,500 / ₹ 15] = 24,500 Shares.

Topics: Corporate Accounting

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