Difference Between Right issue Private Placement Preferential Allotment - Series 587

Difference 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

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).

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