Can a private company issue new shares to a non member

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Querist : Anonymous

Querist : Anonymous (Querist)

15 December 2012 As a Private company can issue a shares to a member who is not a member of a company without offering to a member. As sec 81(1A)deals with rigth issue of shares says that this provison is not applicable to a private company.But sec 3(1)(3) says that there should not be an invitation to public to subscribe to the shares of the company.

what is remedy available in such situation can we proceed u/s 397/398

Ajay Mishra

Ajay Mishra (Expert)

15 December 2012 Hi

Yes, You can allot shares to non members by Board Meeting subject to the compliance of company's articles.

Querist : Anonymous

Querist : Anonymous (Querist)

15 December 2012 sir as in article defined private co within 3(1)(3) and stated that no invitation shall be issued to the public then it is possible to do such.

Ajay Mishra

Ajay Mishra (Expert)

15 December 2012 Hi

Yes, it is very much possible you can do so call a Board meeting and allot shares to them.

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