Query regarding Right of renunciation _Rights issue.
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Deepal Shah
Jan 21, 2015, 2:18:59 AM1/21/15
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Dear Members,
My query is whether the right of renunciation provided to existing shareholders can be transferred to outsiders in a rights issue.
Jayashree Chandrasekaran
Jan 21, 2015, 2:24:46 AM1/21/15
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I think your query is as under
A ...existing share holder entitled to rights has renounced and transferred to B...your query is whether B can renounce it to C...if yes,you are right it is not possible
Jayashree
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C.JAYASHREE
PROPRIETOR
S.GANESH&ASSOCIATES
CHENNAI
98840 17120
PROPRIETOR
S.GANESH&ASSOCIATES
CHENNAI
98840 17120
Deepal Shah
Jan 21, 2015, 2:38:46 AM1/21/15
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Sorry madam, i guess u have misinterpreted my query.
For instance: Mr. A an existing shareholder of pvt. company has been given a right of renunciation during the rights issue. Mr. A wishes to renounce it in favor of an outsider Mr. C, which is not an existing shareholder. Jayashree Chandrasekaran
Jan 21, 2015, 2:42:42 AM1/21/15
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this renunciation by A to Mr.C is very much allowed
Jayashree
Deepesh Nayak
Jan 21, 2015, 2:50:52 AM1/21/15
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Earlier it was allowed to Company for come up with right to renunciation with any third parties i.e. non - members. But, no circular and clarification has issued in this regard under new company act.
Right to renunciation is an easiest way to raise capital from public then private placement under right issue.
CS Simranjeet Singh
Jan 21, 2015, 3:03:37 AM1/21/15
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this is allowed in view of the language used in Section 62.. thats why in Private limited Co's best way to raise capital is through right issue only..
With Best Regards?
Simranjeet Singh
Associate Company Secretary
"To know, is to know that you know nothing. that is the meaning of true knowledge."
Deepesh Nayak
Jan 21, 2015, 4:50:42 AM1/21/15
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I dont think that the third parties renunciation should be allowed in this case. Pvt company restricts through its article for transfer of share to any non member.
From the said point of view we can says that such renunciation can be subjected to any restriction imposed by the article but how can we conclude that section 62 itself allowed for the said transfer of right to any non member??
Deepal Shah
Jan 21, 2015, 5:05:52 AM1/21/15
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Deepesh ji, I am of the same opinion as yours..
CS Simranjeet Singh
Jan 21, 2015, 6:34:32 AM1/21/15
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Dear Deepesh
yes you r right.. transfer is not allowed in case of pvt co's as per their articles.. but this is actually not a transfer... it is an allotment made by the board as the existing shareholder to whom shares are offered under right basis renounce his right in favour of some one else and the board allots shares to the renouncee but again this is subject to the contrary provisions in the articles of the company and offer letter must specify statemen of this right..
other expert views also solicited..
Deepesh Nayak
Jan 21, 2015, 7:00:21 AM1/21/15
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Deepal Shah
Jan 21, 2015, 7:19:43 AM1/21/15
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Thanks everyone..
Deepesh Nayak
Jan 21, 2015, 10:57:29 PM1/21/15
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Ms. Deepal,
Has your query resolved??
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