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    FCCB

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    Radha Rampalli
    FCCBs are convertible bonds issued by a country in a foreign currency rather than its own. They act as both debt and equity, making regular coupon and principal payments but allowing bondholders to convert the bond into stock. Companies issuing FCCBs in India require prior government permission and must have a consistent track record of at least 3 years. FCCBs are subject to a maximum 51% foreign investment limit and taxed at 10% on interest payments until conversion to shares.

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    FCCB

    Uploaded by

    Radha Rampalli
    178 views8 pages
    FCCBs are convertible bonds issued by a country in a foreign currency rather than its own. They act as both debt and equity, making regular coupon and principal payments but allowing bondholders to convert the bond into stock. Companies issuing FCCBs in India require prior government permission and must have a consistent track record of at least 3 years. FCCBs are subject to a maximum 51% foreign investment limit and taxed at 10% on interest payments until conversion to shares.

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    FCCBs are convertible bonds issued by a country in a foreign currency rather than its own. They act as both debt and equity, making regular coupon and principal payments but allowing bondholders to convert the bond into stock. Companies issuing FCCBs in India require prior government permission and must have a consistent track record of at least 3 years. FCCBs are subject to a maximum 51% foreign investment limit and taxed at 10% on interest payments until conversion to shares.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    178 views8 pages

    FCCB

    Uploaded by

    Radha Rampalli
    FCCBs are convertible bonds issued by a country in a foreign currency rather than its own. They act as both debt and equity, making regular coupon and principal payments but allowing bondholders to convert the bond into stock. Companies issuing FCCBs in India require prior government permission and must have a consistent track record of at least 3 years. FCCBs are subject to a maximum 51% foreign investment limit and taxed at 10% on interest payments until conversion to shares.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 8

    FCCB

    (Foreign Currency Convertible Bonds)

    By Swetha Chowdary.P

    FCCB
    Foreign currency convertible bond (FCCB) is a

    convertible bond issued by a country in a currency different than its own currency. This is the powerful instrument by which the country raises the money in the form of a foreign currency. The bond acts like both a debt and equity instrument. Like bonds it makes regular coupon and principal payments, but these bonds also give the bondholder the option to convert the bond into stock.

    Foreign Currency Convertible Bond Policy in India


    Ministry of Finance government of India defines FCCB.

    According to it: "Foreign Currency Convertible Bonds" means bonds issued in accordance with this scheme and subscribed by a non- resident in foreign currency and convertible into ordinary shares of the issuing company in any manner, either in whole, or in part, on the basis of any equity related warrants attached to debt instruments; "

    What is the criteria for issuing FCCBs?


    Any company who wish to raise the foreign funds by

    issuing FCCB, require prior permission of the Department of Economic Affairs, Ministry of Finance, Government of India. The company issuing the FCCB should have the consistent track record for a minimum period of three years The Foreign Currency Convertible Bonds shall be denominated in any freely convertible foreign currency and the ordinary shares of an issuing company shall be denominated in Indian rupees. ..Contd

    The issuing company should deliver the ordinary

    shares or bonds to a Domestic Custodian Bank as per regulation. The custodian bank on the other hand instructs the Overseas Depositary Bank to issue Global Depositary Receipt or Certificate to non-resident investors against the shares or bonds held by the Domestic Custodian Bank.

    Limits of foreign investment in the issuing company


    The Ordinary shares and Foreign Currency

    Convertible Bonds (FCCB) that are issued against the Global Depository Receipts are treated as Foreign Direct Investment (FDI). However total foreign investment made either directly or indirectly shall not exceed 51% of the issued and subscribed capital of the issuing company.

    Taxation on Foreign Currency Convertible Bonds


    Until the conversion option is exercised, all the interest

    payments on the bonds, is subject to deduction of tax at source at the rate of ten per cent. Tax exercised on dividend on the converted portion of the bond is subject to deduction of tax at source at the rate of ten per cent. If Foreign Currency Convertible Bonds ( FCCB ) is converted into shares it will not give rise to any capital gains liable to incometax in India. If Foreign Currency Convertible Bonds (FCCB) is transferred by a non-resident investor to another non-resident investor it shall not give rise to any capital gains liable to tax in India.

    CONCLUSION
    This is the powerful instrument by which the country

    raises the money in the form of a foreign currency. India has been using the FCCB window as a major finance raising tool.

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