Issue of shares- private limited company

Pvt ltd 1653 views 5 replies

Neelam

25 Points Joined February 2010

The Articles of a Private Limited Company generally provide Authority to Board of Directors to issue the Shares and increase the paid-up capital of the Company.

In this case, Suppose the Company has two shareholders, can the Board increase the paid up capital of the company by issuing share only to one shareholder, instead of both? does this amount to a right issue?

To the best of my knowledge, since it is at the discretion of the Board, it is authorised to issue the shares, provided - money is received and the issue is at fair value.

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Replies (5)

Parashar

Company Secretary 2004

1013 Points Joined April 2009

The case is not clear as the allotment of shares is a systematic procedure.

Yogesh Bhandari

CA FINAL Student

429 Points Joined July 2011

Right issue present,, when shares is going to issue as public issue.. In this case, normal procedure will be followed.

Rashi Tiwari

Company Secretary

131 Points Joined July 2009

It all depends on the Articles of the Company.... In a closely held Compnay where there are only two share holders there is a possibility that htey are the Directors as well in such a case if allotment is made in board meeting it means both the Directors ( who are probably the share holders) have consented the allotment.

Rashi Tiwari

Company Secretary

131 Points Joined July 2009

in such case it will not be a right issue

Neelam

25 Points Joined February 2010

in this case, there are 2 Directors, Mr. A and Mr. B, while shareholders are Mr. A and Mr. X.

prior to the said issue of shares, the proportion of shares held by Mr.A and Mr.X is 50% respectively. The additional allotment is to Mr. A (at fair value). The post issue shareholding pattern will be 75:25.