Issue of preference shares under companies act 2013

Co Act 2013 3996 views 3 replies

Mayuri Joshi

Service

43 Points Joined February 2012

Dear All,

Can Company issue Preference Shares to its existing Preference Shares Holders under Section 62(1) (a) under Rights Issues of Companies Act, 2013 by issuing letter of offer to the existing prefer share holder through electronic mode and then pass board resolution and issue shares to the existing preference shareholders and utilize money towards allotment of shares, if yes, please let me know detailed procedure and time required to comply.

2) If Preference Shares cannot be issued under Rights issue, so do we need to follow length procedure of Section 55 of Companies Act, 2013 read with Rule 9 of Companies (Share Capital and Debentures) Rules, 2014 for every allotment of Preference Shares, coz in our company we use to do allotment as and wen company required money for project ? Wat will be list of documents if aforesaid section is required to be followed and time limit required for same.

Replies (3)

ashish

Practising Company Secretary

32 Points Joined May 2009

In my view it will not be treated as Right Issue. Because for right issue, new shares have to be offered to existing equity holders in proportion their shareholding. So you have to full compliance of section 42, 55 & 62.

heramb

student

26 Points Joined October 2014

Can a Company issue Preference Shares on Rights basis persusant to section 62 of Companies Act, 2013.

Kriti Bareja

Company Secretary

45 Points Joined August 2015

As per section 62(1) whenever a company proposes to increase its subscribed share capital, such shares shall be offered to existing equity shareholders in proportion to the paid up equity capital. so if company wants to issue preference shares then such shares shall be offered to existing equity shareholders.