Can two rights issue of preference shares be issued, based on just one Resolution?

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Geronimo (Querist)
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08 February 2024 Interesting Conundrum. Can two rights issue of preference shares be issued, based on just one Resolution passed?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 Yes, it is possible for a company to issue two rights issues of preference shares based on one resolution passed, provided certain conditions are met:

1. **Authority in Resolution**: The resolution passed by the company's board of directors or shareholders must explicitly authorize the issuance of multiple rights issues of preference shares. This resolution should clearly specify the terms and conditions of each rights issue, including the number of shares to be issued, the price, the record date, and any other relevant details.

2. **Distinct Terms**: Each rights issue must have distinct terms and conditions. This typically means that there should be separate communication to the shareholders outlining the details of each rights issue. This ensures transparency and clarity for shareholders regarding their rights and obligations under each issuance.

3. **Compliance**: The company must ensure compliance with all applicable laws, regulations, and its own articles of association regarding the issuance of preference shares and rights issues. This includes adherence to procedural requirements such as notice periods, disclosures, and approvals from regulatory authorities if applicable.

4. **Shareholders' Approval**: Depending on the jurisdiction and the company's articles of association, shareholders' approval may be required for the issuance of preference shares. Even if the initial resolution covers multiple issues, specific approvals or confirmations from shareholders may be necessary for each subsequent issuance.

In summary, while one resolution can authorize multiple rights issues of preference shares, each issuance must be distinctly defined and compliant with legal and regulatory requirements. Proper communication and documentation are crucial to ensure transparency and to protect the interests of shareholders and the company.