Difference Between Right issue Private Placement Preferential Allotment - Series 587

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).
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
Good one Divesh.
ReplyDeleteCan loan already received by company (spcial resolution not passed) be converted into Equity shares by way of right issues ?
ReplyDeleteFor 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?
ReplyDeleteSir,
ReplyDeletecan you please tell according to which provision maximum period of private placement can be 365 days for my knowledge.
Great share!
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