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rights issue for unlisted company

Amritorupa Kanjilal (Manager-Secretarial) (90 Points)

25 February 2011

If an unlisted public ltd. co. wants to issue shares to existing shareholders on rights basis, is special resolution at general meeting required or will board resolution suffice?

Pls help.

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9 Replies

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 26 February 2011

For issuance of shares to existing shareholders only Ordinary Resolution is sufficient. SR is not required in listed companies as well..

SR will be required to issue shares other than existing shareholders under section 81(1A).

After approval from shareholders, Board will allot shares.

Shridhi Jain (Company Secretary) (1678 Points)
Replied 26 February 2011

Pls tell whether BR is sufficient for that purpose.

jayasimha (CS TRAINEE) (28 Points)
Replied 09 March 2011

hi.. is there any thing to be taken care on pricing of rights. pls reply

NEERAJ SAGAR (student) (70 Points)
Replied 09 March 2011

Special Resolution is required to passed at the general meeting. correct me if am wrong.

Neha (CS) (52 Points)
Replied 21 March 2011

Only Board Resolution is required if shares are issued to existing shareholders u/s 81(1A).

CA Deepak Gupta (In Practice) (81 Points)
Replied 14 March 2012

Hi...

I want to know if there is any restriciton regarding issue price of shares in a right issue? (In case of an unlisted public company).

Pankaj Arora (Learner) (3134 Points)
Replied 14 March 2012

Basically there is no restriction for unlisted companies

for listed companies there shares trande on stock exchange so right issue share price keep low than market price because if right issue price of share will be more than market value of share nobody would

participate in right issue because they could buy it on lower price through stock exchange

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P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 15 March 2012

Strictly speaking, there is no need to pass members resolution in case of a purely rights issue and only Board resolution will suffice. However, if the issue involves fraction of shares which is to be ignored, approval of members will be necessary. Further, the issue may also involve additional shares and right of renunciation in favour of third person. Hence it may be advisable to pass ordinary resolution of members for approval of the issue. As regards pricing, there is no restriction in case of unlisted companies.