Question

Convertible debentures cannot be issued at a discount if ______.

Options

• They are to be immediately converted.

• They are not to be immediately converted.

• None of the above.

Answer 1

Convertible debentures cannot be issued at a discount if they are to be immediately converted.

Explanation:

Under company law, a corporation cannot issue equity shares at a discount. If discounted debentures are converted into shares immediately, it means the company is indirectly issuing shares at a discount, which is legally prohibited.