04 May 2010
Dear sir/ ma'am Am a keralite, now here there is one multi level marketing company which is incorporated as a public ltd co is issuing shares to public at Rs 4/ share. They are having a plan to start retail outlets over kerala and saying they will be listed in 2012. They have shown the the regn certificates in their website and issued share certificates to customers'. They are telling that the face value is Rs 2/share and premium Rs2/. Is there anythng like that aco can issue shares to public as bulk before got listed in stock excnge. My friends are forcing me to do the marketing for this. Please i need an expert advice. Thank You. Shiyas
04 May 2010
I am not an expert in corporate law. How ever, constrained to find it un-answered.
On the face of the query, it appears to be a fake transaction.
1. Registration as a Public Limited Company does empower it to issue share to the public.
2. It is not permissible to get listed in 2012, where as shares are being issued today.
3. Please ask for the prospectus. This is the basic document for issue of shares to the public. The Prospectus has to be approved by the approved by the SEBI and filed with the registrar of the company.
4. I would suggest you to check with the Registrar of the Companies, whether the certificate displayed at their website is genuine at all.
04 May 2010
A limited company can not issue it's shares to public without following the guidelines set by SEBI. From your query it appears that it is not a genuine Company. It has to be brought to the notice of regulator for avoiding loss to the public from comapany.
CAclubindia
