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Preferential allotment of shares by private limited company

Virginie marie (Executive Corporate Secretary) (36 Points)

20 November 2014

Can anyone give me an idea about how to issue fresh shares to the key managers of the Private Limited Company? I understand that we need to call board meeting and pass resoultion. Please give me format of board resolution. Further we need to conduct EGM to pass special resolution. Please give me format of Special resolution to issue shares thro' preferential allotment.

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CS Mitesh Mehta (Company Secretary) (17139 Points)
Replied 21 November 2014

OFFER & ISSUE OF EQUITY SHARES ON PREFERENTIAL BASIS -SPECIAL RESOLUTION

“RESOLVED THAT pursuant to the provisions of section 42, 62(1)(c) and other applicable provisions, if any of the Companies Act, 2013 read with the Companies (Prospectus and Allotment of Securities) Rules, 2014 and the Companies(Share Capital and Debentures) Rules, 2014 (including any statutory modification thereto or re-enactment thereof for the time being in force)(the “Act”), the Articles of Association of the Company, the Consent of the Members of the Company be and is hereby given to authorise the Board of Directors(including any committee constituted thereof) of the Company to offer and issue up to _________ (______________) Equity Shares of Rs. ________/- (____) each for cash at par aggregating upto Rs. ________________ (Rupees _______________________) on preferential basis through private placement, in one or more tranches to_______________ on such terms and conditions as agreed between the Company and the said ________________.

FURTHER RESOLVED THAT for the purpose of giving effect to the aforesaid resolution, the Board of Directors of the Company be and is hereby authorized to take such steps and to do all such other acts, deeds, matters and things and accept any alteration(s) or amendment(s) or correction(s) or modification(s) as it may deem fit and appropriate and give such directions/ instructions as may be necessary to settle any question, difficulty or doubt that may arise in this regard.”

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Virginie marie (Executive Corporate Secretary) (36 Points)
Replied 21 November 2014

Thank you so much sir.. Sir I need to know whether preferential allotment is possible if company makes losses for 3 consecutive years?

CS Mitesh Mehta (Company Secretary) (17139 Points)
Replied 21 November 2014

According to my knowledge no restriction on preferential issue for loss making company

Virginie marie (Executive Corporate Secretary) (36 Points)
Replied 21 November 2014

Ya Even I feel the same. One CS member suggested that loss making companies cannot issue preferential allotment. Preferential allotment is only for the purpose of differential voting. Is that correct sir?

CS Mitesh Mehta (Company Secretary) (17139 Points)
Replied 21 November 2014

No company limited by shares shall issue equity shares with differential rights as to dividend, voting or otherwise, unless the company having consistent track record of distributable profits for the last three years. ‘Preferential Offer’ means an issue of shares or other
securities, by a company to any select person or group of persons on a preferential basis

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Virginie marie (Executive Corporate Secretary) (36 Points)
Replied 21 November 2014

So, I need not bother about loss making right.. I can issue shares thro' preferential offer to the Key Managers..

Bina Ipe (practising CA) (36 Points)
Replied 17 December 2014

For Procedures to be followed during preferential allotment, is a private placement offer letter as per PAS 4 to be prepared. Also, is a record of the placement offer to be kept in PAS 5 register?

CS Mitesh Mehta (Company Secretary) (17139 Points)
Replied 17 December 2014

yes you have to prepare PAS -4 & PAS-5

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RAVI SINGH (PROFESSINAL PROGRAMM) (22 Points)
Replied 18 June 2015

respected sir . i want to know wheather a pvt. company can issue shares at premium and par at the same point of time to different shareholders .IF yes then what are the avilable option..pls reply soon