JUSTIFICATION FOR HIGH PREMIUM TO ROC
This query is : Resolved
kalpana maheshwari
(Querist)
04 May 2011
A PUBLIC LIMITED CO. HAS ISSUED SHARES TO A PROMOTER AT A HIGH PREMIUM OF RS. 190 PER SHARE AFTER FILING FORM 2 ROC IS ASKING FOR JUSTIFICATION OF SAME WHAT JUSTIFICATION SHOULD I GIVE?
Sachidanand Singh
(Expert)
05 May 2011
I would build a case around high expected free cash flows and thus high value of shares. (If the company is contemplating issue of shares to public through a prospectus over next two years it is important to ensure that the promoters do not allot themselves shares at lower price today.)
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