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The companies act states that preferential allotment shall also be treated as private placement and will have to comply with the requirements of private placements like issue of letter of offer, valuation by registered valuer etc. In case of preferential allotment of shares or other convertible securities to the promoters, should the company issue letter of offer and comply with the other requirements like valuation. With regard to the special resolution to be passed, can the company pass a single resolution with an upper limit so that the resolution can be used for all allotments to be made during the next 12 months. I understand that the special resolution should be acted upon within 12 months. Can a price band be fixed with power to the board to determine the price. In case of price band, how would the post issue shareholding pattern be made. Only when the exact price of share is known, can the number of shares to be alloted be determined. Please advice.

Private placement

Posted By: Arun kumar 10 year(s) ago

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Arun Kumar

Thanks. In case a price band is fixed and the special resolution fixes the maximum aggregate amount of the issue, how will the post issue shareholding be prepared and disclosed in the notice of egm, since the number of shares to be issued is not known upfront and would be decided at the time of allotment.

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Expert Ankit Singhi

The provisions of private placement will apply

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Anil

I concur

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