Itisha Gulati

Itisha GulatiSEBI (ICDR) REGULATIONS, 2009 REGARDING PREFERENTIAL ISSUE BY LISTED COMPANY:

Meaning:

Preferential Allotment means an issue of shares by a body corporate under Section 62 (1) (c) of the Companies Act, 2013.

Relevant Date means a date 30 days prior to the date on which the general meeting of the Company is held in terms of Section 62(1) (c) of the Companies Act, 2013.

Conditions while making preferential issue by listed Company:-

1. Approval from shareholders shall be taken.

2. Existing proposed allottees shall have shares in dematerialised form.

3. Shall not make preferential issue unless it:

(a) Is in compliance with the conditions of continuous listing

(b) Has obtained PAN of all the proposed allottees.

4. Issuer company cannot make issue to an person who has sold any equity shares during  the six months preceding the relevant date. (Explained below under the heading of persons ineligible for issue)

Persons Ineligible for preferential issue:-

  1. Person belonging to promoter or promoter group has sold his equity shares six months preceding the relevant date.
  2. Person belonging to promoter or promoter group who has earlier applied for warrant but failed to exercise it.

Lock-in Requirements:-

Securities allotted to:

  1. Promoter and promoter group- If excess of 20% of total capital of the Company then lock in for a period of 1 year otherwise for 3 years from the date of allotment.
  2. Other than promoter and promoter group- Lock in for a period of 1 year from the date of allotment.

Pricing for preferential issue:

(a) Where the equity shares of the Company has been listed on a stock exchange for a period of equal or more than 26 weeks on relevant date at a price not less than higher of the following:-

The average of the weekly high and low of the closing prices of the related shares quoted on the Stock exchange during:

26 weeks preceding the relevant date

OR

2 weeks preceding the relevant date

(b) Where the equity shares of the Company has been listed on a stock exchange for a period less than 26 weeks on relevant date at a price not less than higher of the following:-

  1. The price at which shares were issued by the Company in its IPO or value arrived in Compromise or arrangement.
  2. The average of the weekly high and low of the closing prices of the related shares quoted on the Stock exchange during 2 weeks preceding the relevant date
  3. The average of the weekly high and low of the closing prices of the related shares quoted on the Stock exchange during the period shares have been listed preceding the relevant date.

IMP NOTE: On completion of 6 months, if price computed as above is less than other computation as per 6 months average then the difference shall be paid by the allottees to the Company.

Compliance Requirement:

A certificate shall be obtained from the Statutory Auditor of the Company that all compliances related to Preferential issue has been done according to the requirements of SEBI and shall be placed before the shareholders meeting.

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