Points to remember

Issue should be authorized by Articles of Association of the Company.

Only fully paid securities to be issued and the following securities can be issue under preferential allotment.

Issuance of Equity shares.

Issuance of Fully or partly convertible debentures

Issuance of any other securities convertible into equity shares.

The preferential issue can be offered to person other than equity shareholders of the Company and prepare a list of persons (not exceeding 200 in a financial year for each kind of security) to whom offer may be made. (While counting 200, QIB and ESOP are excluded).

Ensure that no allotment is made against any previous offer/ invitation of any kind of security is pending.

Prepare a list of persons (not exceeding 200 in a financial year for each kind of security) to whom offer may be made. (While counting 200, QIB & ESOP are excluded)

Determination of Issue Price on the basis of valuation Report of Registered Valuer.

Where convertible securities are offered, price of resultant shares shall be Determination of Issue Price on the basis of valuation Report of Registered Valuer determined before and on basis of valuation Report.

Time Limit to complete the preferential allotment:

whichever is earlier

Time Limit to complete the preferential allotment

Separate Bank Account

Process for Preferential issue of Securities

Important Note: Right to acquire Shares under Preferential allotment can’t be renounce in favor of any other person. Meaning thereby, no person other than the person so addressed in the application form shall be allowed to apply through such application form.

About the Author

ACS Divya Goel

Author is Divya Goel, ACS working as Assistant Manager- Company Secretary with Neeraj Bhagat & Co. Chartered Accountants, a Chartered Accountancy firm helping foreign companies in setting up business in India and complying with various tax laws applicable to foreign companies while establishing their business in India. She can be reached at info@neerajbhagat.com.

Author Bio

Qualification: CA in Practice
Company: Neeraj Bhagat & Co.
Location: New Delhi, New Delhi, IN
Member Since: 28 Feb 2019 | Total Posts: 26
Neeraj Bhagat & Co. is helping foreign companies in opening up of Liaison/ Branch Office in India and complying with various tax laws applicable to foreign companies while establishing a business in India. Neeraj Bhagat is the founder of Neeraj Bhagat & Co. Chartered Accountants, a Chartered View Full Profile

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2 Comments

  1. kumarbraj7@gmail.com says:

    As per Rule 14 of private Placement Rules, 2014, private companies shall file with the ROC In form MGT-14, copy of the Board resolution with respect to approval under clause (c) of subsection (3) of section 179.

    Please clarify.

    1. Neeraj Bhagat & Co. says:

      As far as filing of MGT 14 is concerned in this case, the MGT 14 is required to be filed to record and intimate the special Resolution passed by the company instead of Board Resolution in case of Private Companies. Henceforth, it is not written under the Rules that Board resolution is required to be attached so meaningthereby its your discretion whether to attach the copy of Board Resolution or not as this is not mandatory by the law.

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