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Dear Members Would request you all to please opine on the following: Rights issue is governed by Section 62 (1)(a) of the CA 2013. Rules don't talk much about the rights issue. For preferential allotment u/s 62 (1)(c), rules states that it needs to follow the compliances of Section 42 but not for rights issue So can it be construed that for rights issue, section 42 is not applicable and accordingly there is no need to open separate bank account for the same and also there are no restrictions on utilization of Share Application money and it can be used for any purpose even before allotment? Also can an allotment (not issue) be made through resolution by circulation. Please advice

Section 62- Further issue of share capital.

Posted By: Khushboo 9 year(s) ago

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Expert Ankit Singhi

Yes, provision of section 42 shall not be applicable on right issue, company needs to comply with section 62 of the Act for right issue and allotment can be made through resolution by circulation.

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