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Preferential Allotment

udit sharma (Company Secretary) (2303 Points)

16 December 2010

Hi..

What is the difference between Preferential Allotment and Private Placement of shares?

Can we say that Preferential Allotment is a kind of Private Placement of shares??????

God Bless

Udit Sharma

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3 Replies

Rajeev kumar Nayak (ACS) (283 Points)
Replied 16 December 2010

Yes, Private placement of shares is a kind of preferential allotment of shares.

in case of listed company, SEBI ICDR Regulations uses the term preferential allotment.

in general meaning when shares are issued to selected group of people and not to public at large then it is called private placement. same meaning is of private placement also.

thus both have same meaning.

Regards

Rajeev Nayak.

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 17 December 2010

The difference being in case of listed companies allotment to select group of people will be called preferential allotment while in case of unlisted company it will be called a private placement.

Jaideep (Service) (1368 Points)
Replied 17 December 2010

Preferential allotment is an allotment made by giving preferences to a selected group of people.

While private allotment is through private arrangement for subscribing shares. Generally term used when anchor investor or venture capital invest in the compnay.

Regards