Today, We will try to find out some of the very commonly asked Question & Query! let’s try to sort it out!! Hope it will help you out!!
The Question: In the case of the Right Issue of shares under Section 62(1)(a) of the Companies Act, 2013, Can the Company allot shares to a person other than existing shareholders?
Provision: As per the provisions of section 62(1)(a)(iii) of the Companies Act, 2013, the Company can issue the shares to persons other than existing shareholders, after the expiry of the offer period specified in the offer letter or on receipt of the intimation from the person/existing shareholder to whom the notice to subscribe the Right issue of shares has been given that he declines to accept the shares offered under Right Issue of Shares, the Board of Directors of the Company may dispose of the same in such a manner which is not disadvantageous to the Company and the Shareholders.
Explanation: So, one can conclude that as per the provision of section 62(1)(a)(iii) of the Companies Act, 2013, if the shareholders decline to accept the shares offered or the offer period has been expired then in such case the directors can issue the shares to the persons other than existing shareholders of the Company, which is not disadvantageous to the Company and shareholders.
Author Bio
