Capital Increase Without Pre-emptive Rights II

Okay, lets continue yesterday's discussion on Capital Increase Without Pre-emptive Rights. Yesterday we stopped at the criteria of debt that can be converted into equity and in order to fulfill the requirement of the type of debt that can be swapped into equity, we need to see the debt from its Collectible Rights to the payee. Based on para 2 Article 35 of the existing Corporate Law No. 40 year 2007, a debt is considered to have Collectible Rights and therefore can be compensated or converted into equity if such debt arise due to:

1. The Company has received funds in consideration for the tangible or intangible goods/services provided;

2. A guatantor of such debt has paid down all of the Company's debt; or

3. The Company acts as the guarantor for some third party and the Company has recieved some benefit either monetary benefit or in kind benefit that can be valued in monetary terms.

Based on the above, so basically debt that can be converted into shares or capital injection are those debts which benefit have been enjoyed by the Company. In the explanation of such article, it was mentioned that interest or coupon or penalty arising from the debt are not part of the definition of debt although such interest, coupon or penalty may be already overdue. This is because the Company did not enjoy anything out of the interest or coupon or penalty. In essence, the debt portion that can be converted into share capital is only the principal amount only.

Okay... now lets continue tomorrow for more detailed discussion on this debt to equity conversion. again, if you find this writing is useful, please encourage me to continue to write. Or if it is not, I would like to hear from you as well....

Cheers,
Spidey Sail