CCD — Compulsorily Convertible Debenture

A CCD is a debenture — debt, governed by Section 71 of the Companies Act — with a conversion clause that removes optionality: it must convert to equity shares on the trigger date or event, never redeemed for cash. Until conversion, it sits as a liability on the balance sheet and the holder is a creditor, not a shareholder, which changes voting rights, dividend entitlement, and priority on winding up.

Because RBI classifies CCDs as debt instruments at issuance (they only become equity on conversion), foreign investment via CCD is typically structured as External Commercial Borrowing or routed to fit within FEMA's debt-instrument rules, with different reporting than an equity allotment. This is a common trap: term sheets that model iSAFEs as CCDs need the FEMA characterisation checked before the foreign leg of the round closes.

Debenture issuance requires a debenture trust deed for secured debentures and a special resolution where the company's articles require one; conversion, when it happens, still needs a board resolution allotting the resulting equity shares and a fresh PAS-3.

The cap table, where CCD — Compulsorily Convertible Debenture appears as a computed field traced to the ledger event that created it.