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ISSUE OF DVRs😵

Priya Kashyap (Student) (7053 Points)

31 March 2019

can a company issue DVRs In case it has defaulted payment of interest in term loan from bank in month of June 2017 but remedied in November and now wants to issue DVRs in December 2017.???????
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3 Replies

Chirag (Professional) (1979 Points)
Replied 31 March 2019

No, DVRs can be issued only after expiry of 5 yrs from the end of FY in which default made good... As Per Your Query , Co. keep defaulting in payment Of Principal & Interest From Past 6 Months and it was paid on Nov '17.So Till the end of 5 Yrs From FY Ie. 5 Yrs From 31-3-18 ( after 31-3-23) it's Restricted to issue any shares with differential voting rights...(Pvt companies are exempted) . Sec.43(a) read with Rule 4 Cos(Shares capital and Debentures Rules), 2014

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Priya Kashyap (Student) (7053 Points)
Replied 31 March 2019

thanks Chirag but can't we say the company has remedied it's default before issue

Chirag (Professional) (1979 Points)
Replied 31 March 2019

No, If this is allowed then whole purpose of law shall be defeated and as per general interpretation, Rule 4 Says " If company makes any default in Payment of interest " here one thing to note that Default in this context stands for before issue and In your query it's done in same year when Co would like to issue shares with DVRs ,So Until and unless 5 Yrs Not Expired from the end of FY in which default made good... It can't issue share with DVRs, I hope it clears to you!!

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