Sakshi (Company Secretary) (31 Points)
24 July 2013A company ABC Ltd has two shareholders A & B. The Company , A and B enter into an agreement that any amount of share capital will be invested in the Company by B till September 2013.
Now the Company wishes to issue further share capital. The query is whether Section 81(1)(a )is applicable?
please also refer the link below:
https://articles.economictimes.indiatimes.com/2013-05-27/news/39557371_1_usl-united-spirits-ltd-preferential-allotment
Ankit
(CA, CS)
(3064 Points)
Replied 24 July 2013
Yes Sakshi,
According to me, the section will apply since for any further issue of capital, the first with of refusal lies with the exsting shareholders. and thus, only if a spcl resolution is passed, can the company go ahead and allot the shares on a pref. basis to the outsiders
- Ankit
Sakshi
(Company Secretary)
(31 Points)
Replied 24 July 2013
Thanks for your reply Ankit.
but haven't the shareholders already renunciated their rights by executing that shareholder's agreement?
what i understand is that these sections are applicable on any further issue of share capital.no agreement can stand above the act.(Sec 9 of Comp Act)
and that link which i have placed in my post.it also says that post the execution of an agreement also a SR was passed in the EGM.
please if possible support your replies with case laws and or real life examples.
Ankit
(CA, CS)
(3064 Points)
Replied 24 July 2013
yes Sakshi, you are right. an agreement can not override the act.
and when the act has a requirement of a SR, i dont think an agreemtn can suffice the requirement.
though all in all the effect may be the same, but still a SR should be passed and recorded in the minutes book.
a similar case was with Jet Airways India Limited and Etihad Airways Deal as well. an agreement was entered into by Jet and Etihad, wherein Jet would allot shares to Etihad. and then eventually an EGM was called for passing the SR. then there were other glitches, is a different thing, but SR was passed.
Sakshi
(Company Secretary)
(31 Points)
Replied 30 July 2013
HI Ankit,
thanks for making my opinion stronger on this issue. i also checked the Jet-Etihad deal (see link
https://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=880464&num=0)
they have also followed the same process viz taking SR at EGM though the SHA has been executed.
My other question is that within what time period share application money is to be allotted?
i understand 180 days. but is this provision applicable only when the Comp(preferential allotment) rules are applicable?can you please provide me with relevant backups?
thanks
Sakshi
CAclubindia
