• Company Law
  • Specimen
  • Draft of Explanatory statement with Terms of Issuance of Optionally Convertible Preference Shares
  • Nidhi Maurya
  • img March 19, 2026

Draft of Explanatory statement with Terms of Issuance of Optionally Convertible Preference Shares

Pursuant to Section 55 of the Companies Act, 2013 and Rule 9(3) of the Companies (Share Capital and Debenture) Rules, 2014, certain disclosures with respect to the Terms of issue shall be made to the members for approval of issuance of the Optionally Convertible Preference Shares.

EXPLANATORY STATEMENT PURSUANT TO APPLICABLE PROVISIONS OF THE COMPANIES LAW FOR APPROVAL OF ISSUANCE OF [.] OPTIONALLY CONVERTIBLE PREFERENCE SHARES ON RIGHTS ISSUE BASIS

 

TO APPROVE THE ISSUANCE OF OPTIONALLY CONVERTIBLE PREFERENCE SHARES ON RIGHTS ISSUE BASIS

 

Item No. [●]:

The Board of Directors of the Company, at its meeting held on [●], has approved the issuance and offer of Optionally Convertible Preference Shares (“OCPS”) on a rights issue basis, having such face value and aggregating to such amount as may be determined, with the objective of raising funds for the business operations and future expansion plans of the Company.

Pursuant to the applicable provisions of the Companies Act, 2013 read with the relevant rules made thereunder, the approval of the shareholders of the Company is required by way of a Special Resolution for issuance of preference shares on a rights basis. Accordingly, the Board recommends the resolution set out in the accompanying notice for approval of the members.

 

Relevant disclosures in terms of Rule 9(3) of the Companies (Share Capital and Debenture) Rules, 2014, are mentioned as under:

Size of the Issue:

Such amount as may be determined.

 

Number of Shares:

Such number of Optionally Convertible Preference Shares as may be determined

Nominal Value:

Such face value per share as may be determined.

 

Nature of Shares

The OCPS shall be cumulative in nature.

Objects of the Issue

To raise funds for business operations and future expansion of the Company

Manner of Issue:

The OCPS shall be issued on a rights basis to the existing equity shareholders of the Company in proportion to their shareholding as on the record date to be determined.

 

Issue Price:

Such price per share as may be determined.

 

Basis of Pricing

The shares may be issued at such price as determined in accordance with applicable laws.

Terms of Issue / Redemption / Mode of Redemption:

As detailed in Annexure-A.

 

Conversion Price:

Such price per equity share as may be determined.

 

Shareholding Pattern & Dilution

The existing shareholding pattern and expected dilution upon conversion of OCPS shall be provided in Annexure-B.

 

None of the Directors or Key Managerial Personnel of the Company or their relatives are, in any way, concerned or interested, financially or otherwise, in the resolution, except to the extent of their respective shareholding in the Company.

The draft offer letter and other relevant documents shall be available for inspection by the members at the registered office of the Company during normal business hours up to the date of the general meeting and also at the meeting.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annexure-A

Terms of Issue of Optionally Convertible Preference Shares (OCPS)

  1. Face Value
    Such amount per share as may be determined.
  2. Dividend
    The OCPS shall carry a cumulative dividend at such rate per annum on the face value as may be determined. The dividend shall accrue from the date of allotment and shall be payable out of distributable profits subject to declaration by the Board. Any unpaid dividend shall accumulate and be paid upon conversion or redemption, subject to applicable law.
  3. Voting Rights
    The holders of OCPS shall be entitled to vote only on resolutions directly affecting their rights, including matters relating to winding up, repayment or reduction of share capital. Voting rights shall be proportionate to their shareholding in the preference share capital.
  4. Liquidation
    In the event of winding up or liquidation of the Company, OCPS holders shall have a preferential right over equity shareholders with respect to repayment of capital and accrued dividend.
  5. Tenor
    The OCPS shall have such tenure from the date of allotment as may be determined, upon expiry of which the outstanding OCPS shall be redeemed or converted at the option of the holder.
  6. Conversion
    OCPS holders shall have the option to convert their OCPS, in whole or in part, into equity shares at any time, on such terms and at such ratio as may be determined, ranking pari passu with existing equity shares.
  7. Redemption
    The OCPS shall be redeemable in accordance with applicable laws and on such terms as may be determined. The redemption value shall be as per applicable provisions and valuation norms, where required.
  8. Costs and Stamp Duty
    All expenses relating to stamp duty shall be borne by the Company.

 

 

 

 

Annexure B

Pre-issue and expected post-issue (fully diluted)  Shareholding pattern

 Sl. No.

Category

Pre-issue

Post-issue (Fully diluted)

 

 

 

No. of shares held

 

 

% of shareholding

 

No. of shares held

 

% of shareholding

 

A

Promoters' holding

 

 

 

 

1

Indian

-

-

-

-

 

Individual

 

 

 

 

 

Bodies corporate

 

 

 

 

 

Sub-total

 

 

 

 

 

 

 

 

 

 

2

Foreign promoters

 

 

 

 

 

sub-total (A)

 

 

 

 

 

 

 

 

 

 

B

Non-promoters' holding

 

 

 

 

1

Institutional investors

 

 

 

 

2

Non-institutional Investors

 

 

 

 

 

Private corporate bodies

 

 

 

 

 

Directors and relatives

 

 

 

 

 

Indian public

 

 

 

 

 

others [including Non-resident Indians(NRIs)]

 

 

 

 

 

Sub-total (B)

 

 

 

 

 

GRAND TOTAL

 

 

 

 

 

 

Author Bio
profile image

Nidhi Maurya

briefcase Created with Sketch Beta. Company: TVA Co LLP
Designation: CS Trainee
Location: -
Gender: female

I am CS professional Passed Student, undergoing 21 Months Training View Full Profile

Comments

Be the first to leave a comment for this Article
Your Rating: