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Fresh issue of shares not in current shareholding pattern.

Varun Sharma (Proprietor-Sharma Varun & Co.) (244 Points)

27 January 2016

Dear Sir

Please help me below with Sections in CA, 2013 and Detailed Procedure

Currrent Shareholidng Patters in a Unlisted Private Limited Company.

A - 45%

B - 55%

By fresh issue of shares the company wants revised sharehloding pattern as under:

A - 80%

B - 20%

Is this possible ? Can a Majority Shareholder can be a Minority Shareholder. Under which section and procedure?

Please share your views and solution.

Thanks.

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8 Replies

CS Divesh Goyal (Practicing Compnay Secretary) (50010 Points)
Replied 27 January 2016

If Company go for right issue of shares then comapny have to give offer in the proportion of old shareholding pattern. But if you wanna to change the pattern of sharholdingthen get it renounce from the shareholders in the favour of other or go for the private placement of shares.

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Varun Sharma (Proprietor-Sharma Varun & Co.) (244 Points)
Replied 28 January 2016

Thanks for your response.

Sneha Chinchli (Asst CS) (22 Points)
Replied 28 January 2016

Dear Diyvesh,

If its a equity share issue of the same type of shares, won't the Company need to go through rights issue method compulsorily ?

CS Divesh Goyal (Practicing Compnay Secretary) (50010 Points)
Replied 29 January 2016

No its not mandatory to go throught right issue compulsarily.

Sneha Chinchli (Asst CS) (22 Points)
Replied 29 January 2016

Dear Divyesh,

But the wordings of the section go as:

62. (1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered—

(a) to persons who, at the date of the offer, are holders of equity shares of the company in proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of offer subject to the following conditions, namely.............................

So won't this mean that for a Company to issue Equity share capital, it has necessarily to issue shares by way of Rights issue in terms of Section 62(1) ?

Please share and guide if you share a different interpretation

CS Divesh Goyal (Practicing Compnay Secretary) (50010 Points)
Replied 29 January 2016

If you are issuing shares only to existing shareholders as per 62 then you have to go for right issue of shares. otherwise you can go for private placement/prefrential issue of shares.