Issue of Share Warrants

[Rashmi M R]

Dear All,

Sec 114 of the Act provides for issue of share warrants by a Public Company.

In this regard, whether a Private company which is a subsidiary of Public company can issue Share Warrants? Please provide any supporting clarifications from the Dept if available.

Looking forward to your opinions/ suggestions.



Thanks & Regards,
Rashmi

[chakri hegde]

Dear Rashmi,

A share warrant is a document which is issued under the common seal of the company and holder of the warrant is entitled to certain number of shares specified therein. It is a bearer document and the title to the shares specified in the share warrant can be transferred by mere delivery of the share warrant. Upto this extent, it is a negotiable instrument.

Under Section 114 of the Act, the issue of such share warrant can be made only if the public company (the Act says that public companies but not the private company which is a subsidiary of   public company) is so authorized by its articles and permission of the Central Government has been obtained.  

 

A private company cannot assume power in its articles to issue share warrants. Because share warrants are transferable by delivery, such a condition would be opposed to the restriction on transferability which is an essential requirement in the case of a private company.

 

So, by means of this interpretation, I think we can conclude that, Share Warrants can be issued only by Pure Public Companies and not by Private Companies and even by a private company which is a subsidiary of a public company.

 

Other members views solicited………………………

 

 

 

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With Best Wishes
Chakri G Hegde
Nissin Foods India Ltd.
Bangalore

[Vivek Aggarwal]

Dear Rashmi

I totally agree with the explanation given by Mr. Chakri. If the govt. intended to provide this in case of Pvt. company which is subsidiary of public company, they would have specifically provided so in the section itself as is generally provided in other sections.

 

Regards

Vivek Aggarwal

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From: chakri hegde <chakri...@gmail.com>
To: csmy...@googlegroups.com
Sent: Tue, 29 June, 2010 6:22:53 PM
Subject: Re: [CSMysore] Issue of Share Warrants