Preferential allotment

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Aditi (Querist)

11 February 2016 In case of preferential allotment of an unlisted Company the price is to be determined on the basis of the valuation report submitted by CA. Rules also says that the price should not be less than the price mentioned in valuation report. In my case as per the valuation report the price per share is Rs. 12. Face value is Rs. 10 per share. Company intends to issue shares at Rs. 25 per share (i.e. Rs. 10 Face value and Rs. 15 premium). The shareholders are also ready to invest in the shares of the Company at Rs. 25 per share. So can Company make allotment at a price of Rs. 25 per share which is greater than Rs. 12 per share as mentioned in valuation report. ? If yes how can we justify. ?

CS Divesh Goyal

CS Divesh Goyal (Expert)

12 February 2016 No Company cant issue shares on the price above then the value decided by valuer.
You have to issue on that amount only.

Aditi

Aditi (Querist)

12 February 2016 Thank You sir for your reply.

Sir I further have a question. Can valuation report submitted by CA be based on unaudited financial results ? Or it is compulsory to be based on audited financial results. ?

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