Section 62 of co. act 201

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Simranjeet Singh (Querist)
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14 January 2015 Dear Members,
Need your advice on the following issues:

• As per section Sec 62 of the companies act 2013, shares should be issued to the existing shareholders through right issue only in the proportion of shares already held by them. If after the expiry of the time specified in the notice to issue shares, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose of them in such manner which is not dis-advantageous to the shareholders and the company. In this context please clarify on the following:

1. Whether the right issue is to be made in the existing holding pattern only or it can vary?
2. Does this mean that the board can thereafter issue shares in any manner to any number of persons who may or may not be related to the existing shareholders?
3. Can the right given to a shareholder be renounced to any number of persons who may or may not be related to the existing shareholders?

• Section 62(1)(c ) mentions that shares can be issued to any person if authorized by a special resolution, whether or not that person is the existing shareholder or employees of the company. But the company need to comply with the conditions laid down under sec 42 related to private placement.
Then what is the difference between sec 42 and share issue under this section. Is there any relation provided here?

• Secondly if the company goes for the option of private placement of shares under sec 42 of the act
1. The section says that monies received on application under this section shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any purpose, what if the money has already been received by the company for issue of shares even before making the offer for private placement
2. Rule 14 says that the value of offer should not be less than Rs 20,000 face value of investment. Does this include premium amount per share or just the face value?

c.bakshi

c.bakshi (Expert)
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16 January 2015 just do one thing...issue a offer letter to all the members along with letter of renunciation and mention a condition in the offer letter that if the company is not receiving sufficient amount of application then such right may be renounced to sum another person. by doing so such shares can be issued to other person then a shareholder or kind of relatives or any other person... just fill letter of renunciation from the member and get it properly signed then file Pas-3form can be filed and proceedings are completed.