25 January 2011
private placement route is what an unlisted public company chooses to avail, if it does not want to go with public issue and formalities related thereto and is confident of getting willing contributors by its individual approach. Normally, this is what such a company does, for raising funds after its incorporation. Preferential issue comes into picture when the existing shareholders of such a company can not or do not want to contribute to the further funding requirements in full and, therefore, are willing to let in new set of shareholders and approve further equity shares under Section 81(1A). This can be also by private placement, if the company can get hold of such willing contributors, without going to public. I hope you now understand the difference.
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