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Increase in paid up share capital - allotment of shares

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Dhara

Company Secretary

155 Points Posted on 13 September 2016

Dear All,

We have to increase Paid up share capital ot the Company for which allotment is required to be made.

In this case which method should be adopted? Private Placement or Right Issue?

Allotment would be as follows :

Out of 49000shrs 25000 to existing Director/Shareholder and 24000shrs to new Director

Is private placement preferable

Replies (3)

Pratik Shah

Practising Company Secretary

3263 Points Posted on 13 September 2016

Only private placement shall be done. Right issue is not allowed as you are issuing shares to non-members also.

P C Agrawal

Registered independent director Past Ch

5233 Points Posted on 13 September 2016

Rights issue is also possible. Sec.62(1)(a) requires shares to be offered (and not "allotted") to existing shareholders. Subject to provisions in the Articles the offer can include right to renounce in favour of third person [Ref.Sec.62(1)(a)(ii)].