Difference between right issue and private placement

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Querist : Anonymous

Querist : Anonymous (Querist)

29 April 2016 I have query regarding difference between right issue and offer through private placement as per Companies Act, 2013. Whether private placement can be done to existing shareholders/shareholder of the Company. As per the Companies (prospectus and allotment of securities) rules 2014, justification or basis for the price at which offer or invitation through private placement was made shall be disclosed to the shareholders in the general meeting. How to do this. whether any valuation report should be taken from any professional. Is any Minimum subscription requirement is involved in both the options i.e. right issue and private placement.

c.bakshi

c.bakshi (Expert)

29 April 2016 if you are issuing shares to existing shareholders, then it is through RIGHT issue mode and if they are not exisiting shareholder of the company then such issue can only be done through private placement. it is a mode where director of the company or some officer of the company proposes to give share to third person without any invitation to the public

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