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With reference to the Compulsorily Convertible Preference Shares, consider the following statements:
1. It gives the assurance of a fixed rate of return plus the opportunity for capital appreciation.
2. These shares get converted to ordinary equity shares after 10-15 years.
Which of the statements given above is/are correct?
  • a)
    1 only
  • b)
    2 only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
With reference to the Compulsorily Convertible Preference Shares, cons...
Insurance regulator IRDAI has rejected Fairfax proposal to convert the company’s holdings in compulsory convertible preferred shares (CCPS) issued by Go Digit Infoworks into equity shares.
  • CCPS, or Compulsorily Convertible Preference Shares, are a key element of startup financing.
  • It gives the assurance of a fixed rate of return plus the opportunity for capital appreciation.
  • These shares carry certain terms—if an early investor has CCPS, he can have more rights than other investors who come in later at a higher valuation.
  • It also helps investors maintain their stake and have a say even if their stake gets diluted later.
  • However, these shares get converted to ordinary equity shares after 10-15 years.
  • That is more than sufficient time for most startups to give their investors an exit.
  • CCPS also helps founders keep control of a company even if their stake is lower than that of investors.
Hence both statements are correct.
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With reference to the Compulsorily Convertible Preference Shares, consider the following statements:1. It gives the assurance of a fixed rate of return plus the opportunity for capital appreciation.2. These shares get converted to ordinary equity shares after 10-15 years.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
Question Description
With reference to the Compulsorily Convertible Preference Shares, consider the following statements:1. It gives the assurance of a fixed rate of return plus the opportunity for capital appreciation.2. These shares get converted to ordinary equity shares after 10-15 years.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to the Compulsorily Convertible Preference Shares, consider the following statements:1. It gives the assurance of a fixed rate of return plus the opportunity for capital appreciation.2. These shares get converted to ordinary equity shares after 10-15 years.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Compulsorily Convertible Preference Shares, consider the following statements:1. It gives the assurance of a fixed rate of return plus the opportunity for capital appreciation.2. These shares get converted to ordinary equity shares after 10-15 years.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
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