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PREFERENTIAL ALLOTMENT (Corporate Law)

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This query is : Resolved



( Author )
17 September 2010

WHAT IS THE MEANING OF TERM "PREFERENTIAL ALLOTMENT" USED IN THE CARO, 2003?


Ankur Garg

( Expert )
18 September 2010

As per section 81 in case of new issue of shares---such new shares should be offered to the existing shareholders of the company as right issue.

But section 81(1A) provides an exception to this rule. As per section 81(1A) new shares can be issued to outsider as preferential allotment with the consent of existing shareholders of the company given through passing special resolution.

This is called preferential allotment.

Regards


Rasesh

( Expert )
18 September 2010

“Preferential allotment "
An issue of shares on preferential basis and/or through private placement made by a company in pursuance of a resolution passed under sub- section (1A) of section 81 of the Companies Act, 1956 and issue of shares to the promoters and their relatives either in public issue or otherwise


tkandharia

( Author )
18 September 2010

Thanks for the answer

As far as I know, Provisions of section 81 regarding right shares are not applicable in case of private limited companies, so while answering the CARO,2003 questionnaire in such a case, can we give the answer as not applicable, as this is the private limited company?


Rasesh

( Expert )
20 September 2010

Absolutely. You may mention accordingly.


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