Indian Contract Act, 1872 mentions that if an offer is made to a specific person or group of persons, which otherwise cannot be accepted by persons other than the ones to whom such an offer is made, it is called as Specific offer.
Keeping this concept into mind, plz clarify if rights issue is a public offer or private (specific offer)? If it is not a public offer, why does minimum subscripttion clause apply to it? Min subscripttion applies only to the IPO and not on FPO.
no right issue is not a public offer bcoz it is a offer made to existing share holder to subscribe for share at a price which is usally lower then market price of old shares .
whereas public offer is open to any person to bring his money and apply for shares
If rights issue is not a public offer, why does minimum subscripttion apply to it?
Mr. Sharad,
i dont think there is anything like min. subscripttion in S.81 kindly update me if i m wrng plz...
regards...
Rights issue is not a public offer in terms of Company Law. In general term to can interpret it as a public offer as it is to a major group. But in terms of Company Law it is not a public offer.
Further, right issue is an offer to buy shares in the company. Its not an obligation. So, it is at the option of the shareholder whether to subscribe for right shares or not. Even if its not an IPO or FPO, still its offer to subscribe shares in the company. It requires minimum subscripttion so that the issue can be converted into allotment. This is not in case of bonus shares as it is not an offer and its an accounting adjustment entry whereby reserves are converted into capital.
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With all due respect Mr. Kabra can you please tell where do we have the minimum subscripttion clause, i think i have also read it but not able to find it." Thanks&Regards Karan Gandhi |
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