Right Issue : Whether Separate Bank Account is mandatory ?

[CS Alpesh Dhandhlya]

Dear Experts,

Whether it is mandatory to open the Separate Bank Account for Right Issue ?

Can we proceed with the current account of the Company because section 62 of the Companies Act, 2013 does not provide for separate Bank Account ?

[CS Sagar - 99703593330]

Dear Sir,

Separate bank account is not mandatory for Right Issue. You can go with your regular account.

Separate bank account is mandatory for private placement  u/s 40.

Regards

[Jayashree Chandrasekaran]

When the law says for collecting share application a separate bank account is required then will it not be applicable for Rights Issue?

Jayashree

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C.JAYASHREE
PROPRIETOR
S.GANESH&ASSOCIATES
CHENNAI
98840 17120

[CS Alpesh Dhandhlya]

Dear Jayashree Ji,

Your views are logically right but section 62 of the Companies Act, 2013 does not expressly provides so therefore can we proceed without doing so ? 

[Jude Dsouza]

If you are issuing shares on rights basis to existing holders, then no need to go for a separate bank account. But if you are triggering 62(1) (c) which speaks of issue of shares to other than existing holders. Then you will have to follow the compliance mechanism prescribed for section 42 which includes opening of separate bank account.

[supriya singh]

For right issue, no need to open a seperate bank account, you can use the existing account only for share subscription money.

On Sat, Nov 1, 2014 at 2:29 PM, Jude Dsouza <dsd...@gmail.com> wrote:

If you are issuing shares on rights basis to existing holders, then no need to go for a separate bank account. But if you are triggering 62(1) (c) which speaks of issue of shares to other than existing holders. Then you will have to follow the compliance mechanism prescribed for section 42 which includes opening of separate bank account.

[Neha Agrawal]

for the purpose of right issue no separate bank account is required.

On Saturday, November 1, 2014 11:28:31 AM UTC+5:30, CS Alpesh Dhandhlya wrote:

[Rakhi Singh]

as per me if Company receives share application money than it should be come in separate bank account whether it is right issue or private placement.

Thanks & Regards,

 Rakhi Singh

Company Secretary

NKG Infrastructure Limited

CIN-U74899DL1989PLC038371

Tel-+91-11-23413731

Fax-+91-120-4537458

Mob# - +919990664838

[csyogan .]

provision ?

[Kallki Sree]

Dears,

No need of separate bank account for rights issue.

Best,

Kallki

[VIMAL SHARMA Compliance]

but if the exiting shareholders renouncing their right in favor of outsider, & Co. is allotting shares to outsider, then still, there is no need of separate a/c ? 

Thanks & Regards,

Vimal Sharma

Move out of your comfort zone, You can only grow, if you are willing to feel awkward and uncomfortable, when you try something New..

[SHWETA BADGUAJR]

Where it is mentioned that a separate bank account is not required or not mandatory the word used in the act is shall then how do we interprete it as not mandatory for private company?

Pls explain I am bit confused?

also escrow account was for listed or IPO companies right?

On Saturday, 1 November 2014 12:07:45 UTC+5:30, Jayashree Chandrasekaran wrote:

[CA Sumit Parolia]

under the right issue no need to open separate bank account...

Regards,
ACA SUMIT PAROLIA
S PAROLIA & ASSOCIATES
Practicing Chartered Accountants
Kolkata

E-mail: Ca.pa...@gmail.com

[shweta badgujar]

Pls make me understand through section as u/s 42(6) its states the same
Shweta Badgujar- ACS 25072

Proprietor

Shweta Badgujar & Associates

9619767607

Just Be yourself and believe in yourself.

Pleasure in the job puts perfection in the work.

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[ACS suresh chaudhary]

Dear Shweta

Provided that monies received on application under this section shall be kept in a separate bank account in a scheduled bank. it means private placement and not right issue.

[ACS suresh chaudhary]

section 62 (1) (a)  tells us about Right issue.  and valuation report/special resolution and separate bank account is not required for right issue but for public issue and private placement it is required.

section 62 (1) (c) is about private placement.

Howsss that !

On Saturday, November 1, 2014 at 11:28:31 AM UTC+5:30, CS Alpesh Dhandhlya (PCS Ahmedabad) wrote:

[shweta badgujar]

thank you

Shweta Badgujar- ACS 25072

Proprietor

Shweta Badgujar & Associates

9619767607

Just Be yourself and believe in yourself.

Pleasure in the job puts perfection in the work.

[Manoj Singh Bisht]

Dear all,

To have or not to have a separate Bank account is only one out of the so many issues related with the  whole scheme of issue and allotment of securities under the Companies Act, 2013.

I do not have any adverse views, as such, regarding the discussion going on here. Literal interpretation does not give a different view. 

However, would like you to assess the interpretational aspects involved in section 62 read with section 42 of the Act, and rules made thereunder.

As long as you are following section 62(1)(a) within the four corners of law and the shareholders (by their own will and decision) are renouncing in favour of a third person and third person is made aware of the fact that the shares are being given to him by way of renouncement and not by way of an offer, there are no issues.

However, to put things to perspective, i would like to clarify that the rights issue could also attract provisions contained in section 42 related to pvt placement. It depends on facts of the case.

If you are in fact, using the rights issue route to circumvent the provisions of section 42, then surely, facts would help in determining  whether the company offered (directly or indirectly) or the shareholders renounced. The testing issue is not renouncement but how the renouncement was made, whether the shareholders renounced or acted as agent of the company and offered to the third party( naming it to be renouncement however, in fact, offering as per sec 42) indirectly, on behalf of the Company, to circumvent provisions of section 42. 

In case of pvt. ltd. companies, on the basis of facts and circumstances, court would determine the true essence of the transaction. If the applicant could prove that the shares were offered to him through the shareholder (that could be treated as an AGENT) and not as a renouncement or he was never made aware of the fact that it was a renouncement case, then section 42 would be very much relevant !

Purposive interpretation is very much, relevant here. Analysis on case to case basis + proper documentation, is very much important.

All the best

Rgds

Manoj

On Sat, Mar 26, 2016 at 3:06 PM, ACS suresh chaudhary <cssuresh...@gmail.com> wrote:

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