can company Issue further shares while partly paid up shares exists?
Jyoti
Chandravijay Shah & Co.
There was prohibition on issue of partly paid up securities on preferential issues basis as under Rule 13(2)(c) of the Companies (Share Capital and Debentures) Rules, 2014, the securities allotted by way of preferential offer were supposed to be fully paid up at the time of their allotment. Now, the Rule Amended vide Notification dated 19.07.2016 has omitted the said clause (c) which prohibited issue of partly-paid up shares on preferential basis. Accordingly, a company may issue shares on preferential basis as partly paid up at the time of allotment.
However, your Query needs to be slightly specific. Please mention whether partly paid up issue is on Rights or Preferential basis. Secondly, the proposed 2nd Issue will be on the Rights or Preferential basis. Further, 2nd Issue will be partly or fully paid up.
Anticipating enriching deliberation.
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Jyoti
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Chandravijay Shah & Co.
1. Yes. No bar on issue of partly paid up securities on Rights basis. Even the prohibition on issue of partly paid up securities on Preferential basis is also lifted.
2. One of the Investors of your Company wants to retain his 17% shareholding, meaning your Company wants to go ahead with another Rights Issue. Believing the said 17% shareholding is also in the form of partly paid up Shares, he has to pay up the Balance Amount on the present Shareholding first, then only he can be allotted further Shares. This position remains unchanged, at least qua the said Shareholder, whether earlier Issue of partly paid up Shares was on the Rights or Preferential basis.
From: csmy...@googlegroups.com [mailto:csmy...@googlegroups.com] On Behalf Of Jyoti
Sent: 8 April, 2017 5:28 PM
To: csmy...@googlegroups.com
Subject: Re: [CSMysore] can company Issue further shares while partly paid up shares exists?
Dear Chandravijay Sir,
Thank you very much for your reply......
In our case, an investor want to retain his 17% shareholding in a private company but presently he does not have enough money to invest, but he can bring the money on later date.
Further company is also looking for further raising of funds from other investors after issue of such partly paid up shares.
Now company can issue partly paid up shares through preferential allotment as Companies (share capital and debenture 3rd Amendment) rule 2016, allows to do so.
My query is:
1. Can company issue partly paid up shares through right issue?
2. Can Company issue further shares without making the earlier partly paid up shares as fully paid up?
What will be the best alternative, so that first investor can retain his 17% shareholding in such company?
Regards,
On Fri, Apr 7, 2017 at 8:45 PM, Chandravijay Shah & Co. <chandrav...@gmail.com> wrote:
There was prohibition on issue of partly paid up securities on preferential issues basis as under Rule 13(2)(c) of the Companies (Share Capital and Debentures) Rules, 2014, the securities allotted by way of preferential offer were supposed to be fully paid up at the time of their allotment. Now, the Rule Amended vide Notification dated 19.07.2016 has omitted the said clause (c) which prohibited issue of partly-paid up shares on preferential basis. Accordingly, a company may issue shares on preferential basis as partly paid up at the time of allotment.
However, your Query needs to be slightly specific. Please mention whether partly paid up issue is on Rights or Preferential basis. Secondly, the proposed 2nd Issue will be on the Rights or Preferential basis. Further, 2nd Issue will be partly or fully paid up.
Anticipating enriching deliberation.
From: csmy...@googlegroups.com [mailto:csmy...@googlegroups.com] On Behalf Of Jyoti
Sent: 7 April, 2017 6:15 PM
To: csmy...@googlegroups.com
Subject: [CSMysore] can company Issue further shares while partly paid up shares exists?
Dear Members,
Please suggest.....
A private company has issued partly paid up shares, now can company issue further shares without converting such partly paid up shares into fully paid up shares.
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Jyoti
Dear Chandravijay Sir,
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Chandravijay Shah & Co.
Preferable option is to allot Shares to the existing Shareholder on Rights basis.
After some time, issue Shares to fresh Shareholders on Preferential basis which must be of Fully Paid-Up Shares as per section 42 rw Rule 13(2)(c) of the Companies (Share Capital and Debentures) Rules, 2014.
Since this process of Preferential Issue involves Shareholders’ Meeting, Valuation Report, etc, it takes longer time carry out a Preferential Issue. So, please plan appropriately.
From: csmy...@googlegroups.com [mailto:csmy...@googlegroups.com] On Behalf Of Jyoti
Sent: 11 April, 2017 11:35 AM
To: csmy...@googlegroups.com
Subject: Re: [CSMysore] can company Issue further shares while partly paid up shares exists?
Thank you so much Sir for your reply,
I have one doubt that can company issue further shares to second/other investor through private placement or on preferential basis after issuing such partly paid shares to earlier/first investor?
As in my case both investors are not existing shareholders....
On Tue, Apr 11, 2017 at 8:28 AM, Chandravijay Shah & Co. <chandrav...@gmail.com> wrote:
1. Yes. No bar on issue of partly paid up securities on Rights basis. Even the prohibition on issue of partly paid up securities on Preferential basis is also lifted.
2. One of the Investors of your Company wants to retain his 17% shareholding, meaning your Company wants to go ahead with another Rights Issue. Believing the said 17% shareholding is also in the form of partly paid up Shares, he has to pay up the Balance Amount on the present Shareholding first, then only he can be allotted further Shares. This position remains unchanged, at least qua the said Shareholder, whether earlier Issue of partly paid up Shares was on the Rights or Preferential basis.
From: csmy...@googlegroups.com [mailto:csmy...@googlegroups.com] On Behalf Of Jyoti
Sent: 8 April, 2017 5:28 PM
To: csmy...@googlegroups.com
Subject: Re: [CSMysore] can company Issue further shares while partly paid up shares exists?
Dear Chandravijay Sir,
Thank you very much for your reply......
In our case, an investor want to retain his 17% shareholding in a private company but presently he does not have enough money to invest, but he can bring the money on later date.
Further company is also looking for further raising of funds from other investors after issue of such partly paid up shares.
Now company can issue partly paid up shares through preferential allotment as Companies (share capital and debenture 3rd Amendment) rule 2016, allows to do so.
My query is:
1. Can company issue partly paid up shares through right issue?
2. Can Company issue further shares without making the earlier partly paid up shares as fully paid up?
What will be the best alternative, so that first investor can retain his 17% shareholding in such company?
Regards,
On Fri, Apr 7, 2017 at 8:45 PM, Chandravijay Shah & Co. <chandrav...@gmail.com> wrote:
There was prohibition on issue of partly paid up securities on preferential issues basis as under Rule 13(2)(c) of the Companies (Share Capital and Debentures) Rules, 2014, the securities allotted by way of preferential offer were supposed to be fully paid up at the time of their allotment. Now, the Rule Amended vide Notification dated 19.07.2016 has omitted the said clause (c) which prohibited issue of partly-paid up shares on preferential basis. Accordingly, a company may issue shares on preferential basis as partly paid up at the time of allotment.
However, your Query needs to be slightly specific. Please mention whether partly paid up issue is on Rights or Preferential basis. Secondly, the proposed 2nd Issue will be on the Rights or Preferential basis. Further, 2nd Issue will be partly or fully paid up.
Anticipating enriching deliberation.
From: csmy...@googlegroups.com [mailto:csmy...@googlegroups.com] On Behalf Of Jyoti
Sent: 7 April, 2017 6:15 PM
To: csmy...@googlegroups.com
Subject: [CSMysore] can company Issue further shares while partly paid up shares exists?
Dear Members,
Please suggest.....
A private company has issued partly paid up shares, now can company issue further shares without converting such partly paid up shares into fully paid up shares.
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