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Checklist of Preferential Allotment

Vivek Jain (CS) (205 Points)

23 February 2022

Anyone can please share the deatiled checklist for Preferential Allotment for Listed Company.

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Chirag (Professional) (1979 Points)
Replied 12 March 2022

Checklist for Preferential Allotment under SEBI (ICDR) Regulations, Updated as on January 2022

SEBI Vide Notification Dated Jan 14, 2022 Modified SEBI (Issue and Capital Disclosure) Regulations, 2018 In Relation To Preferential Issue of Securities by Listed Company

The Major Changes Brought are –

Now there is an eligibility criteria for eligible allottes for not sold/ transfer any shares in preceding 6 Months to relevant date has been reduced to 90 trading days (( Reg. 159(1) & Explanation thereto )
Pre- Preferential shareholding shall be locked in for 90 trading days from relevant date. ( Reg. 167(6) )
Post issue lock in – a. Promoter /promoter group Upto 20% - 18 Months , above 20% - 6 Months ( Reg. 167(1) )

b. Other – 6 months

Pricing norms ( Reg. 164(1))

Definition of Frequently traded shares – Trading turnover in p.r.d.240 days at least 10% ( Reg. 164(5))

A .Pricing when allot < 5% - VWAP of 90/10 Trading days or as per AOA

B .Pricing when allot > 5% - VWAP of 90/10 Trading days or as per AOA or Valuation report

In case of change in control ( Reg. 166A )

90/10 trading days VWAP
AOA Norms
Valuation report
Compliance – Separate Meeting of i/ds , reasoned recommendation , voting pattern

Pledge of securities ( Reg. 167 A)

Pledge allowed by promoters , subject to two conditions ;

As per stipulation by lending institution
For one or more objects in proposed object of issue , firm commitment cases

Timeline For Seeking In Principal Approval ( Reg. 160 (c ) & (f) )

To be filed on the same day of dispatch of notice of AGM/EOGM

Issue of Shares for consideration other than Cash ( Reg. 163(3)

Only share swaps allowed

Activity	Provision	Yes/ No
Reg. 159 (1)	Eligibility of proposed allottees	No sold / Transfer of shares 90 days trading days before relevant date
Rule 13(2)	Check authorization from articles	Confirm or alter AOA
Sec. 42 (2) & R. 14 of Cos (PAS) Rules	Proposed allottees No.	Max. 200
Reg. 170(4)	Demat	Issue shares only In demat mode
164(1) & 166(A)	Valuation report	If shares allotment is > 5% of paid up capital or Issue arises changes in control ‘control has the same meaning as per SEBI ( SAST) reg. 2011
164(5)	Frequently traded shares	Check whether shares are Frequently traded ( i.e. trading turnover is 10% or more in preceding 240 trading days of overall turnover in this period ) for pricing norms
164(1)	Pricing norms	If Frequently Traded >5% higher of valuation report or as per AOA or 90/10 Trading days VWAP <5% - 90/ 10 trading days VWAP or as per AOA Change In Control – same parameters as including justification of price by I/Ds committee post board meeting If Infrequently Traded As per valuation report
167(6)	Pre- Pre. Lock-in	90 Trading days from allotment , starting from relevant date
167(1)	Preferential issue Lock –In	For Promoter/ Promoter Group Upto 20% - 18 Months Above 20% - 6 Months For Others 6 Months Uniform
Reg. 29	Advance Intimation of Board Meeting	Prior intimation to stock exchange at least 2 Clear Working days in advance for board meeting
PIT	PIT Regulations and Cos. Code of Conduct	Trading window closure ( also intimate to stock exchange )
Sec 62(1)(c ) & 173 read with SS.1	Board Meeting	Hold meeting of board by giving 7 days advance notice Consider issue of shares Consider price Consider forming committee of I/Ds ( if issue creates changes in control ) Identify persons to whom allotment will be made Fix day, date , time and venue of meeting and approve notice with Explanatory statement u/s 102 to be passed by Special Resolution Fix Record Date Appoint Evoting agency * Appoint Scrutinizer Authorize CS/ any officer to issue notice and other allied matters (like NP publication, interact with intermediary etc.)
Reg. 30 & Reg. 46(2)	Disclosure	Disclose to Stock exchange outcome within 30 mins. ( as per sebi Cir. Dtd 9/9/2015 ) and also post it on Co’s website
Sec. 42 ,117,179(3) R.24 of Mgmt. and admn rules & r. 14(8) of PAS rules	Filing Form	MGT-14 ( CTC of Board Resolution) within 30 days
163(1)	PCS Certificate	Obtain Certificate from PCS
160 (c ) & (f )	In Principal Approval	On or before dispatch of notice of general meeting
General meeting	Newspaper Advertisement	At least 21 days before AGM
62(1)(c ) ,42 , 100 ,110 & SS-2	General Meeting	Hold General Meeting to pass special resolution ( it may also be passed by Postal ballot – but voting time will be high )
Reg. 30 & 46(3)	Disclosure	Proceedings of general meeting within 24 Hrs.
Reg. 44	Voting Results	Within 2 working days ( format sebi circular 8/2015)
117 & Rule 24	Filing Form	MGT-14 with CTC of Resolution with Explanatory statement
42	Compliances	Separate Bank account to park money received Record Name of Persons to whom application shall be made Offer Letter in PAS-4 Sent within 30 days of recording of names Issue only after Filing MGT-14 If existing shareholder are offered shares then no need of circulation of offer letter Maintain record of allottes in PAS -5
42 & 173	Allotment	Complete Allotment within 15 days of passing of special resolution by board or committee resolution (Circular resolution u/s 175 can also be passed )
Reg. 30 & 46(3)	Disclosure	Outcome of meeting to Stock exchange within 30 minutes & post it on website within 2 working days in format prescribed
Reg. 31	Statement	If allotment changes existing capital structure to 2% then within 10 days of allotment shareholding pattern to be filed with stock exchange
42(8)	Filing	File PAS -3 within 15 days of allotment ( i.e. Within 30 days of general meeting)
FEMA	Filing	If allottees are Foreign Resident or Company then file FC-GPR through RBI Firms Portal within 30 Days of allotment
Stock Exchange(s)	Listing Approval	Within 20 Days from Date of Allotment
Depository	Corporate Action	To Credit Allotted shares in NSDL/CDSL and pay stamp duty for capital admission
Stock Exchange	Trading Approval	Upon Capital Admission apply for Trading approval