Rights issue---very urgent
This query is : Resolved
09 January 2008
Sir I would like to know that on waht basis is the quantum of rights isssue decided??
what is the basis for deciding
No of shares to be issued
Price at which to be issued
Premium if any
and the prorata basis as well
what is the basis for deciding
No of shares to be issued
Price at which to be issued
Premium if any
and the prorata basis as well
09 January 2008
listed or unlisted company aims for a rights issue depending on requirement of cheaper funds or funds at a minimal cost.
1.so decide what is your funds requirement
2. what is alternative funds cost which if you can raise in market or from other lenders like banks or ECB and AT what cost?
3.YOU need to offer shares to all existing shareholders in rights issue.
if you do not want to do that, go for preferential allotment to promoters and relatives or private or preferred investors who like to invest in your company.
4. depending on your funds required volume, go for 1:1 or if your needs for funds are more, go for 2:1/3:1
accordingly decide premium per share.ALL THESE PARAMETRERS ARE DECIDED BY WHAT AMOUNT OF FUNDS YOU LIKE TO RAISE
5. after rights( post rights ), what is
debt : equity ratio .
can you maintain at existing levels or as acceptable to your lenders?
6. no doubt after rights issue, your debt taking capacity goes up as equity will be more.
7. see if we can we maintain present dividend rate on the enhanced equity after rights issue?
8. you need statutory approvals from your present lenders like FIs/Banks(if you have) for the rights issue.hope we can manage the same.
9. stock exchange in princilple approval for listed companies is required.
pl. note that if for a past issue, there is no trading approval by any stock exchange , they refuse for any present issue.
10. CONSULT YOUR ARTICLES OF ASSOCIATION
IF YOU HAVE THE POWERS TO ISSUE RIGHTS .OR ELSE AMEND YOUR ARTICLES.
10.PASS BOARD AND SHARE HOLDER RESOLUTIONS AFTER ALL ABOVE ISSUES ARE ADDRESSED.
GOOD LUCK.
R.V.RAO
1.so decide what is your funds requirement
2. what is alternative funds cost which if you can raise in market or from other lenders like banks or ECB and AT what cost?
3.YOU need to offer shares to all existing shareholders in rights issue.
if you do not want to do that, go for preferential allotment to promoters and relatives or private or preferred investors who like to invest in your company.
4. depending on your funds required volume, go for 1:1 or if your needs for funds are more, go for 2:1/3:1
accordingly decide premium per share.ALL THESE PARAMETRERS ARE DECIDED BY WHAT AMOUNT OF FUNDS YOU LIKE TO RAISE
5. after rights( post rights ), what is
debt : equity ratio .
can you maintain at existing levels or as acceptable to your lenders?
6. no doubt after rights issue, your debt taking capacity goes up as equity will be more.
7. see if we can we maintain present dividend rate on the enhanced equity after rights issue?
8. you need statutory approvals from your present lenders like FIs/Banks(if you have) for the rights issue.hope we can manage the same.
9. stock exchange in princilple approval for listed companies is required.
pl. note that if for a past issue, there is no trading approval by any stock exchange , they refuse for any present issue.
10. CONSULT YOUR ARTICLES OF ASSOCIATION
IF YOU HAVE THE POWERS TO ISSUE RIGHTS .OR ELSE AMEND YOUR ARTICLES.
10.PASS BOARD AND SHARE HOLDER RESOLUTIONS AFTER ALL ABOVE ISSUES ARE ADDRESSED.
GOOD LUCK.
R.V.RAO
09 January 2008
Thank you sir for such an analytical reply
will get back to you for further guidance
thanks sir
will get back to you for further guidance
thanks sir
09 January 2008
BUT sir if we go for preferential allotment there is a limitation of 5% and apart from that the promoters and his associates already hold as on date 54% of the total shares/Voting rrights , then isnt in that case the preferential allotment ruled out .
Instead of going for rights issue can the co raise 5 crores thru preferential allotment and rest thru some other means. the autho cap being 20 crore , but then the limitation of 54% would be a problem??
isnt it sir??
Instead of going for rights issue can the co raise 5 crores thru preferential allotment and rest thru some other means. the autho cap being 20 crore , but then the limitation of 54% would be a problem??
isnt it sir??
15 March 2008
IF A LISTED COMPANY ,YOU NEED TO COMPLY WITH LATEST SEBI GUIDELINES ON PROMOTER HOLDING .PL.VISIT www.sebi.gov.in
OR www.bseindia.com
R.V.RAO
OR www.bseindia.com
R.V.RAO
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