Professional Documents
Culture Documents
Preferential Allotment of Shares - Companies Act, 2013 - Procedure
Preferential Allotment of Shares - Companies Act, 2013 - Procedure
Preferential Allotment of Shares - Companies Act, 2013 - Procedure
2013 | PROCEDURE
AUTHOR :CSPRACHI
https://taxguru.in/company-law/preferential-allotment-shares-companies-act-2013-procedure.html
Company having share capital can increase its subscribed capital through following modes of issues:
Many times because of availability of many options to issue securities a dilemma arises that which one will be
better option to fulfill our requirement; Therefore this Article will help you to understand what kind of Securities
can be issued through Preferential allotment ,to whom it can be issued, Procedure of the issue and Provisions
thereof.
Page Contents
Provided that in case of any preferential offer made by a company to one or more existing members only, the
provisions of sub-rule (1) and proviso to sub-rule (3) of rule 14 of Companies (Prospectus and Allotment of
Securities) Rules, 2014 shall not apply.
7. Valuation Report:
The price of the shares or other securities to be issued on a preferential basis, either for cash or for
consideration other than cash, shall be determined on the basis of valuation report of a registered valuer;
where shares or other securities are to be allotted for consideration other than cash, the valuation of such
consideration shall be done by a registered valuer who shall submit a valuation report to the company
giving justification for the valuation;
The price of shares or other securities to be issued on preferential basis shall not be less than the price
determined on the basis of valuation report of a registered valuer (by Sub-rule (3) is inserted by
notification G.S.R. 413 (E) dated 18 June, 2014).
Send notice to convey the Board meeting to approve the following agendas:
Issue of securities by way of Private Placement Basis.
Number of securities to be issued.
Finalization of Draft offer letter in Form PAS-4
Approve the notice of calling for Extra-Ordinary General Meeting of the shareholders of the Company to
take members approval.
Opening of a separate Bank Account in a schedule Bank to receive application money
Deciding the list of allottees
Take note of the Valuation Report and decided the price of security.
Decide the offer period
Convey Board Meeting at least after 7 days from the date of notice and approve the agendas mentioned in
the notice
Convene Extra-Ordinary General Meeting for the followings purpose:
Pass Special Resolution to approve Private Placement.
Approve the Offer cum application Letter (form PAS-4) to be sent to the Identified Person
File Form MGT-14 with ROC within 30 days of passing the Special Resolution approving the
Private Placement.
Send Offer cum Application Letters in Form PAS-4 to Identified Persons within 30 days of recording the
names of the identified persons.
Prepare the complete record of private placement offer in Form PAS-5.
Receiving application money in a Separate Bank Account with Scheduled Bank within the offer period as
decided by the Company
After Closure of Offer Period call a Board Meeting and pass Resolution for allotment of securities and
issue securities certificate.
File the return of allotment in Form PAS-3 within 15 days from the date of the allotment made i.e. After
passing Board Resolution for allotment of securities.
The Company will be allowed to utilize the money raised through Private Placement only after Return of
Allotment in Form PAS-3 is filed with the ROC
10. Conclusion:
Through this article we try to cover provisions and procedure applicable on the Companies specially unlisted
companies (because in case of listed companies more procedure needs to be followed according to SEBI
guidelines) at the time of issuing securities through preferential allotment.
*****
Hope the information will assist you in your Professional endeavours. In case of any query / information, please
do not hesitate to write back to us at csprachijain07@gmail.com.