Right Issue or Preferential Issue

[Himani Gupta]

Dear Member,
 
What is the difference between preferential allotment and Right issue by unlisted public company and Private Company.
If a Private company allot further shares to its holding
company, will it be consider as right issue or prefrential issue?
 
Thanks and Regards,
CS Himani Gupta.

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CS Himani Gupta
I change myself, I change the world

[madhwesh acharya]

Dear Mr. Himani Gupta,

 

Right issue is the issue of shares to the existing shareholders on proportionate basis. Eg: If there are 10 shareholders, then the shares will be issued at a ratio say 1:2 (i.e., a shareholder holding 1 share will be eligible to apply for 2 shares). In this case there is no preferential treatment to any one or group of shareholder(s). Unless the existing shareholder renounces his right to outsider; no outsider will be issued shares.

 

Preferential issue - is the issue of shares to one or group of shareholder(s) or to an outsider, on a preferential basis.

in your case, where a private company allots shares to its holding company alone (where as still there are other shareholders who are not issued shares on rights basis), then this becomes a preferential issue. However, to term it as "preferential issue" under company law, you will have to go through Preferential Allotment rules and the Act. Subsequent compliance follows as per law.

 

Member's views solicited.

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Regards,
Madhwesh K
Company Secretary
Bangalore
9945399584

[Himani Gupta]

Thanks Sir for your valuable inputs.

 

and i m not Mr.Himani Gupta , i m Miss Himani Gupta.

 

Regards

Himani Gupta

[Khusboo]

Dear Sir

Very nicely explained....

Thanks & Regards

CS Khusboo

Hyderabad