Allotment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 June 2016 My Company wants to allot 500 shares of Rs.10 each i.e total of Rs. 50,00 to some NEW investor. This is clearly a matter of Private Placement since he is not an existing shareholder. However, Rule 14(2)(c) of Prospectus & Allotment Rules provides that Private Placement cannot be done for an amount of less than Rs.20,000 to each person.

How do I allot shares to this new investor? Which section will apply to such allotment?

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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22 June 2016 for small companies, If the exiting share holders reject the offer of Right issue and renounce their right in favour of new shareholder then shares can be issued.
For right issue of shares Section- 62 of Companies Act, 2013 will apply.