Cardiff Services

Issuance of CCPS

Overview – Issuance of Compulsorily Convertible Preference Shares (CCPS)

Compulsorily Convertible Preference Shares (CCPS) are a hybrid financial instrument that combines features of both equity and preference shares. Under this instrument, preference shareholders have the right to receive dividends but, as the name suggests, these shares are mandatorily converted into equity shares after a predetermined period or upon occurrence of specified events.

 

Issuing CCPS is a popular choice for startups and companies raising funds from investors who seek downside protection through preferential dividends and capital security, while also having the upside potential when shares convert into equity.

 

At Cardiff Services, we assist companies in structuring, issuing, and complying with legal and regulatory requirements for CCPS issuance under the Companies Act, 2013 and relevant SEBI regulations (for listed entities). Our services cover drafting terms of issue, board and shareholder approvals, filing with the Registrar of Companies (RoC), and post-issuance compliance.

Features – Issuance of Compulsorily Convertible Preference Shares (CCPS)

The issuance of Compulsorily Convertible Preference Shares (CCPS) is a strategic way for companies to raise capital while offering investors a blend of fixed returns and equity upside. At Cardiff Services, we help companies structure and execute CCPS issuance with full compliance and efficiency.

  • Mandatory Conversion to Equity Shares
    CCPS holders must convert their preference shares into equity shares at a predetermined date or upon specified events, as per terms laid down in the issue.
  • Preference Dividend
    Holders of CCPS are entitled to a fixed preferential dividend, paid before any dividend is declared for equity shareholders.
  • No Voting Rights Until Conversion
    Typically, CCPS do not carry voting rights before conversion unless explicitly provided in the terms.
  • Fixed Conversion Ratio and Timeframe
    The terms specify the exact conversion ratio (e.g., 1 CCPS = 1 equity share) and the timeline for conversion.
  • Protection Against Dilution
    The conversion terms may include anti-dilution provisions protecting investors from future dilution.
  • Capital Raising Flexibility
    CCPS issuance allows companies to raise capital without immediately diluting promoter or existing equity shareholders’ control.
  • Regulatory Compliance
    Issuance is governed by:

  • Companies Act, 2013 (Sections 42, 62)

  • SEBI guidelines (if listed company)

  • RBI/FEMA guidelines (if foreign investment involved)

  • Customizable Terms
    Companies and investors can negotiate terms related to dividend rates, conversion triggers, lock-in periods, and exit options.
  • Suitable for Startups and Growth Companies
    Preferred by startups and growing companies seeking investor-friendly financing structures.
  • Reporting and Filings Required
    Issuance involves regulatory filings such as PAS-4 (offer letter), PAS-3 (return of allotment), and updates to statutory registers.

With Cardiff Services, you get expert assistance in structuring the issuance, obtaining board/shareholder approvals, drafting necessary agreements, and filing with RoC to ensure smooth compliance.

Documents Required – Issuance of CCPS

Provided by Cardiff Services

  • Board Resolution approving the issuance of CCPS

  • Shareholders’ Resolution (if required by Articles or for altering share capital)

  • Draft Offer Letter (Form PAS-4) for private placement (if applicable)

  • Share Subscription Agreement (SSA) with investors

  • Valuation Report supporting the issue price of CCPS

  • Audited Financial Statements of the company

  • Updated Memorandum of Association (MOA) and Articles of Association (AOA) (if alteration required)

  • Register of Members and Register of Preference Shares updated

  • Payment receipts evidencing subscription amount received

  • Form PAS-3 (Return of Allotment) filed with RoC

  • Board Meeting Minutes for all approvals and proceedings

  • KYC documents of investors (for private companies)

  • Foreign Investment approvals and documents (if applicable under FEMA)

  • Legal Opinion (optional, but recommended)

Procedure – Issuance of CCPS (Compulsorily Convertible Preference Shares)

Facilitated by Cardiff Services

  1. Board Meeting

    • Approve the issuance of CCPS

    • Decide terms: number of shares, issue price, dividend rate, conversion ratio, timeline

    • Approve draft Offer Letter (if private placement)

  2. Shareholders’ Approval

    • Obtain shareholders’ approval through an Extraordinary General Meeting (EGM) if required (e.g., for alteration of share capital)

  3. Prepare Offer Letter / Private Placement Memorandum

    • Draft and send Offer Letter (Form PAS-4) to prospective investors (in case of private placement)

  4. Receipt of Subscription Money

    • Receive application and subscription money from investors within the prescribed time

  5. Board Meeting for Allotment

    • Approve the allotment of CCPS to investors

    • Record the minutes of the meeting

  6. File Return of Allotment (Form PAS-3)

    • File PAS-3 with the Registrar of Companies within 15 days of allotment

  7. Issue Share Certificates

    • Issue physical share certificates or update demat records as applicable

  8. Update Statutory Registers

    • Update Register of Members, Register of Preference Shares, and other statutory records

  9. Post-Issuance Compliance

    • Conduct necessary filings, maintain compliance, and ensure conversion process follows agreed terms

  10. Conversion of CCPS to Equity Shares

    • Upon maturity or event triggering conversion, convert CCPS into equity shares as per agreed ratio

    • File necessary forms and update records post-conversion

With Cardiff Services, the entire CCPS issuance process is managed efficiently, ensuring legal compliance and smooth execution.

Frequently Asked Questions

A company name search ensures that your chosen business name is unique, legally compliant, and not already registered with Companies House UK. It helps you avoid legal disputes, trademark issues, and confusion in the Cardiff business market.

If your desired name is already registered, you’ll need to choose a different name or modify it. Using a taken name could result in rejection by Companies House or potential legal issues. Our experts can help you brainstorm alternative names that are compliant and market-ready.

It’s not advisable to use a name that’s too similar to another company, especially within the same industry. Similar names can confuse customers and risk trademark disputes. A company name search helps you identify these risks early.

For a company name search in Cardiff, you may need:

  • Proposed company name

  • Business entity type (Ltd, LLP, Partnership, etc.)

  • Jurisdiction (Cardiff / UK)

  • Owner or shareholder details (if applicable)

  • Business description

A “high probability” result means your proposed company name is likely to be available, but further checks are recommended. This is why our detailed Cardiff Company Name Search Report includes both identical and similar names for clarity.

Certain words are restricted under UK law (e.g., “bank,” “insurance,” “government”). If you want to use them, you’ll need special approval from regulatory bodies. We guide you through this process if your Cardiff business requires such terms