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Urgent !! issue of shares of closely held company

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D k mitra

ACCountant

21 Points Posted on 12 November 2015

DEAR EXPERTS,

MY QUERY IS AS FOLLOWS :-

AS PER SECTION 62(1)C OF COMPANIES ACT 2013, A COMPANY CAN MAKE PRIVATE PLACEMENT OF ITS SHARES AT MARKET VALUE. BUT THE COMPANY HAD BEEN MAKING SUBSTANTIAL LOSSES FOR THE PAST FEW YEARS. THEN IF MARKET VALUE IS TO BE CONSIDERED, THE SHARE PRICE MAY BECOME NEGATIVE. IF THE COMPANY HAS FACE OF ITS SHARES @ RS.10/- SUGGEST AT WHAT VALUE CAN THE COMPANY MAKE ITS PRIVATE PLACEMENT OF SHARES??

ALSO SUGGEST THE PROCEDURE OF PRIVATE PLACEMENT OF SHARES.

THANKS,

URGENT REPLY REQUIRED

Replies (1)

Krishan Singla

Corporate Law Advisor

880 Points Posted on 14 November 2015

Dear Mr Mitra

Section 62 (1)(c) of the Act , 2013 provides for the preferential allotment of shares to any other person as per the provisions of the Act. This provides that shares be allotted for cash and in case shares are to be allotted other than cash, only then valuation report is requried. The act does not prescribe any minumum or maximum price at which shares are to be allotted and does not prescribe any value for teh shares for unlisted companies . So are listed companies are concerned they can issue shares as per SEBI formula price. Moreover in case of loss even in case of a listed or unlisted comapny , a company cannot issue shares below the face value as then it will be considered as issue of shares at discount. Regards