This is the reply for the past question only....
My dear professional friends,
what is preferential allotment of shares? whether Preference and Equity shares can be issued under this category?Shares issued to whom can be described as preferential allotment.?What are the books prescribed u/s.301 of the companies Act.
2.Preference shares issued by a Private Limited company to it's promoter director can be treated as preferential allotment.
Please share your expert knowledge. Thanks.
Ans. Preferential allotment is a way of infusing fresh equity in the business by issuing shares or warrants to the specified entities at specific prices to a promoter or promoter group or a person acting in concert (PAC) or institutional players. And this could be a strong tool that investors can use to identify investing opportunities.
Shares issued to whom can be described as preferential allotment.?
Ans.When a listed company doesn't want to go for further public issue and the objective is to raise huge capital by issuing bulk of shares to selected group of people, preferential allotment is a good option.
What are the books prescribed u/s.301 of the companies Act.
Ans. Register of contracts, companies and firms in which directors are interested are prescribed u/s.301 of the Companies Act, 1956, further,
(1) Every company shall keep one or more registers in which shall be entered separately particulars of all contracts or arrangements to which section 297 or section 299 applies, including the following particulars to the extent they are applicable in each case, namely.-
(a) the date of the contract or arrangement;
(b) the names of the parties thereto;
(c) the principal terms and conditions thereof,
(d) in the case of a contract to which section 297 applies or in the case of a contract or arrangement to which sub-section (2) of section 299 applies, the date on which it was placed before the Board;
(e) the names of the directors voting for and against the contract or arrangement and the names of those remaining neutral.
(2) Particulars of every such contract or arrangement to which section 297 or, as the case may be, sub-section (2) of section 299 applies, shall be entered in the relevant register aforesaid-
(a) in the case of a contract or arrangement requiring the Board's approval, within seven days (exclusive of public holidays) of the meeting of the Board at which the contract or arrangement is approved,
(b) in the case of any other contract or arrangement, within seven days of the receipt at the registered office of the company of the particulars of such other contract or arrangement or within thirty days of the date of such other contract or arrangement whichever is later, and the register shall be placed before the next meeting of the Board and shall then be signed by all the directors present at the meeting.
(3) The register aforesaid shall also specify, in relation to each director of the company, the names of the firms and bodies corporate of which notice has been given by him under sub-section (3) of section 299.
(3A) Nothing in sub-sections (1), (2) and (3) shall apply-
(a) to any contract or arrangement for the sale, purchase or supply of any goods, materials or services if the value of such goods and materials or the cost of such services does not exceed one thousand rupees in the aggregate in any year; or
(b) to any contract or arrangement (to which section 297 or, as the case may be, section 299 applies) by a banking company for the collection of bills in the ordinary course of its business or to any transaction referred to in clause (c) or sub-section (2) of section 297.]
(4) If default is made in complying with the provisions of sub-section (1), (2) or (3), the company, and every officer of the company who is in default, shall, in respect of each default, be punishable with fine which may extend to 2[five thousand rupees].
(5) The register aforesaid shall be kept at the registered office of the company; and it shall be open to inspection at such office, and extracts may be taken there from and copies thereof may be required, by any member of the company to the same extent, in the same manner, and on payment of the same fee, as in the case of the register of members of the company; and the provisions of section 163 shall apply accordingly.
Preference shares issued by a Private Limited company to it's promoter director can be treated as preferential allotment.
Ans.Section 81 talks about private placement/preferential allotment
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