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CA SONI KRUNAL (Querist)
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24 July 2010 can any body plz tel me what is preferential allotment and private placement?

if a company allots shares to its exixting share holder (not all but some selected) does it amounts to preferential allotment?

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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01 August 2010 Preferential allotment is made to the existing shareholders.

Private placement is made by outside parties as investment. In common language; we can say that they are now partners in the company's business.

In second situation explained in the above question; it amounts to preferential allotment.