Difference Between Right issue Private Placement Preferential Allotment - Series 587


Text Box: Series 587Difference Between
Right issue
Private Placement
Preferential Allotment

Sr. No
Basis of Difference
Right Issue
Private Issue
Preferential Allotment
1
Applicable provisions under Companies Act, 2013
Section 62(1)(a) read with Rules
Section 42 read with rule 14 Companies (Prospectus and allotment of securities) Rules,2014
Section 62(1)(c ) read with rules 13 of Companies (share Capital and debentures)Rules,2014 and Section 42 read with rule 14 Companies (Prospectus and allotment of securities) Rules,2014
2
Type of Security
Only Shares can issue. (Equity and Preference)
Any security can issue. (Equity, Preference Debenture etc.)
Only shares can issue (Equity and Preferene)
3
Eligible for Offer
Issue of shares to existing Equity shareholder in proportion to their existing shareholding
Offer of shares to Investors or any selected group of person or any outsider (other than by way of public offer)
Invitation in one go max- 50 Persons
Max during year- 200 persons
Issue of shares to Both Existing Shareholders and/or outsiders.
4
Approval Required
Approval of Board of Director through Board Resolution required.
Board & Shareholder approval
*(General Meeting)
Board & Shareholder approval
*(General Meeting)
5
Offer period
Minimum Period-15 days Maximum Period -30 days (however in case of private company if consent from 90% of the shareholder then the offer period can be less then as defined above)
* Add 3 additional days extra for dispatch
No specific minimum offer period defined under this section. However, maxium period of offer can be 365 days.
No specific minimum offer period defined under this section. However, maxium period of offer can be 365 days.
6
Format of offer Letter
No specific format
PAS-4(offer Letter)
PAS-5(Complete record)
PAS-4(offer Letter)
PAS-5(Complete record)
*No such Format in case of offer only to existing members.
7
Forms to be filled
1.PAS-3(with in 30 days from allotment)
PAS-3 needs to file with in 30 days of passing of board resolution for allotment of shares.
1. MGT-14 (with in 30 days passing of special resoution in general meeting)
2. PAS-3(with in 15 days of allotment of shares)
1. MGT-14 (with in 30 days passing of special resoution in general meeting)
2. PAS-3(with in 15 days of allotment of shares)
8
Time period for allotment of securities
*otherwise it will be treated as deposit
Within 60 days for the Date of Receipt of Application Money.
Within 60 days for the Date of Receipt of Application Money.
Within 60 days for the Date of Receipt of Application Money.
9
Separate Bank Account
No Separate Bank Account Required
Separate Bank account Required
Separate Bank account Required
10
Fund utilisation
Fund can be utilize any time after receipt of same
Fund can’t be utilise only after filing of PAS-3.
Fund can’t be utilise only after filing of PAS-3.
11
Valuation Report
 Valuation Report is not Mandatory,
*Valuation report is mandatory only in case of issue to non- existing non-resident shareholder
Valuation Report is  Mandatory
Valuation Report is Mandatory.
12
Renounce the offer letter option
Shareholders have rights to Renounce/accept/reject the offer letter
*Subject to authorisation in AOA
No such right available
No such right available
13
Explanatory Statement
Not applicable because no shareholder approval is required
Notice should contain Explanatory statement as per rule 14(2) of Companies (Prospectus and allotment of securities) Rules,2014
Notice should contain Explanatory statement according to rule 13 (d)  of Companies (share Capital and debentures) Rules, 2014 read with rule 14(2) of Companies (Prospectus and allotment of securities) Rules,2014
14
Minimum Subscription or Investment size
No such minimum subscription required
No such minimum subscription required
No such minimum subscription required
15
Mode of Receipt of Subscription money
Subscription money can be receive in cash or through Banking Channel
Subscription money can be receive only through Banking Channel
Subscription money can be receive in cash or through Banking Channel
16
Debenture issue
Debenture can't be issue through right issue of shares
Debenture can be issue through right issue of shares
Debenture can't be issue through this method
17
Non Convertible Preference Shares
can't be issue through right issue of shares
can be issue through right issue of shares
can't be issue through this method

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION


Comments

  1. Can loan already received by company (spcial resolution not passed) be converted into Equity shares by way of right issues ?

    ReplyDelete
  2. For Sr. 2 (Type of Security), under Rights Issue and Preferential Issue it is stated that "Only shares can be issued". In my view convertible debentures can also be issued under Rights/ Preferential Issue mode?

    ReplyDelete

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