Right issue for consideration other than cash

Issue for  consideration other than cash  is normally made at the request  of a particular shareholder who either does not  have sufficient cash or does not want to part with cash.

In the offer letter for rights  issue  what consideration  would you ask for from all the  shareholders?  What about valuation?  Can a company ask all shareholders to give consideration other than cash?  What could be objective of such issue?

Valuation is required for preferential issue. In right issue membes can renounce their right to others and final applicant can request for consideration other than cash, as they have given unsecured loan to company.Is there any restriction for this? I would also like to know if anyone has done it?

Thanks & Regards.

CS Yogina Kochar 

Whether issuing shares against old unsecured loan will amount to consideration other than cash?  I think erstwhile DCA in  its old circular had clarified that it will  amount to consideration  in cash.  In any case, to have clarity and avoid dispute, can you not exchange cheques for refund of loan by company and share application money  by the applicant?

Yes, I can be done. Thanks for valuable input.

Regards, Yogina.

Sir,

In case consideration is to be paid by way of transfer of Immovable Property. Can the company still go for a right issue?

Thanks & Regards

In Right issue, valuation of shares to be issued is not required, but the valuation of consideration other than cash is definately required. please recheck