Share allotment money receipt in OD Account
This query is : Resolved
SHYAM KRISHNAN K
(Querist)
05 August 2024
Our company allot share on rights issue basis, as part of that share holders transfer money to company's over draft account, is there any issue in that transaction?
CA R SEETHARAMAN
(Expert)
06 August 2024
No issues.
In case of Rights issue, the Company proposes to issue its shares to existing shareholders on a pro rata basis. In contrast to the private placement process, there are no limitations on using funds before filing the return of allotment in the case of a rights issue. Therefore, Companies can use the funds the moment they receive it and the allotment of shares can happen even after utilization of funds if the shares are issued through rights issue process.
In case of Rights issue, the Company proposes to issue its shares to existing shareholders on a pro rata basis. In contrast to the private placement process, there are no limitations on using funds before filing the return of allotment in the case of a rights issue. Therefore, Companies can use the funds the moment they receive it and the allotment of shares can happen even after utilization of funds if the shares are issued through rights issue process.
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