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INDEX  Meaning of preferential issue .

if any. the Company has obtained the Permanent Account Number of the proposed allottees. if: i. employee stock option scheme. held by the proposed allottees in the Company are in dematerialised form. employee stock purchase scheme or qualified institutions placement or an issue of sweat equity shares or depository receipts issued in a country outside India or foreign securities REGULATORIY LAWS LISTED COMPANY Companies Act 1956 SEBI (ICDR) Regulations 2009 SEBI (SAST) 2011 Listing Agreement UNLISTED PUBLIC COMPANY Companies Act 1956 Unlisted Public Companies (Preferential Allotment) Rules 2011 CONDITIONS FOR PREFERENTIAL ISSUE A Listed Company may make a preferential issue of specified securities. the Company is in compliance with the conditions for continuous listing of equity shares as specified in the listing agreement with the recognised stock exchange where the equity shares of the Company are listed. . bonus issue. all the equity shares. rights issue. ii. The Company shall not make preferential issue of specified securities to any person who has sold any equity shares of the Company during the six months preceding the relevant date. iv.MEANING OF PREFERENTIAL ISSUE Preferential issue means an issue of specified securities by a listed Company to any select person or group of persons under section 81 of the Companies Act. Where any person belonging to promoter(s) or the promoter group has previously subscribed to warrants of an Company but failed to exercise the warrants. the promoter(s) and promoter group shall be not be issued specified securities of such Company on preferential basis for a period of one year from: iii. v. 1956 on a private placement basis and does not include an offer of specified securities made through a public issue.

FORMLAITES FOR PREFERENTIAL ISSUE Board Meeting To fix the relevant date for the estimation of the price of the share to be issued and fix the date for the general meeting for obtaining shareholders‟ approval for preferential issue. or (b) the date of cancellation of the warrants. Pricing of the Shares/convertible Securities: a) If shares are listed on stock exchange for more than twenty six weeks Shares i. as the case may be. Where the company is not listed on any exchange having nationwide trading terminals.(a) the date of expiry of the tenure of the warrants due to non-exercise of the option to convert. Special Resolution As per Section 81(1A) of the Companies Act. The company agrees to make an application to the Exchange for the listing of any new issue of shares or securities and of the provisional documents relating thereto. before issuing further shares or securities. or The average of the weekly high and low of the closing prices of the related equity shares quoted on a recognised stock exchange during the two weeks preceding the relevant date. . ii. The average of the weekly high and low of the closing prices of the related equity shares quoted on the recognised stock exchange during the 26[twenty six weeks] preceding the relevant date. it shall to obtain such 'in-principle' approval from all the exchanges in which it is listed before issuing further shares or securities. In principal Approval The company shall obtain „in-principle‟ approval for listing as per clause 24 (a) of listing agreement from the exchanges having nationwide trading terminals where it is listed. 1956 any public Company can issue the shares through private placement by passing a special resolution in the general meeting.

. the objects of the preferential issue. pursuant to which the equity shares of the Company were listed. the average of the weekly high and low of the closing prices of the related equity shares quoted on a recognised stock exchange during the two weeks preceding the relevant date. or iii. the average of the weekly high and low of the closing prices of the related equity shares quoted on the recognised stock exchange during the period shares have been listed preceding the relevant date. Disclosures As per the guidelines of SEBI (ICDR) 2009 the following disclosures shall be made in the explanatory statement of the notice of general meeting I. the proposal of the promoters.Shares arising out of Warrants/FCD/PCD Same as above. directors or key management personnel of the Company to subscribe to the offer. the time within which the preferential issue shall be completed. III. the shareholding pattern of the Company before and after the preferential issue. or ii. 1956. the price at which equity shares were issued by the Company in its initial public offer or the value per share arrived at in a scheme of arrangement under sections 391 to 394 of the Companies Act. II. Relevant Date = as above or as at Company‟s option a date 30 days prior to date of exercise of warrants/FCD b) If shares are listed on stock exchange for less than twenty six weeks Shares Price should not be less than Higher of the following: i. as the case may be. IV.

associates and related entities for consideration other than cash. The special resolution shall specify the relevant date on the basis of which price of the equity shares to be allotted on conversion or exchange of convertible securities shall be calculated Time limit The allotment of shares/ convertible securities shall be done within 15 days of passing such resolution If the allotment of specified securities is not completed within fifteen days from the date of special resolution. their relatives. the specified securities shall continue to be locked. XI. which shall be submitted to the recognised stock exchanges where the equity shares of the Company are listed if the stock exchange is not satisfied with the appropriateness of the valuation.V. a fresh special resolution shall be passed and the relevant date for determining the price of specified securities will be taken with reference to the date of latter special resolution. the identity of the proposed allottees. an undertaking that the Company shall re-compute the price of the specified securities in terms of the provision of these regulations where it is required to do so. Payment of consideration Full consideration of specified securities other than warrants issued shall be paid by the allottees at the time of allotment of such specified securities. the valuation of the assets in consideration for which the equity shares are issued shall be done by an independent qualified valuer. X. the percentage of post preferential issue capital that may be held by them and change in control. an undertaking that if the amount payable on account of the recomputation of price is not paid within the time stipulated in these regulations. VII. considering the proposed preferential issue. it may get the valuation done by any other valuer. in the Company consequent to the preferential issue. if any. IX. an amount equivalent to at least twenty five per cent of the consideration shall be paid on the date of allotment of warrants and the balance amount shall be paid shall be paid at the time of allotment of equity shares pursuant to exercise of option against each such warrant by the warrant holder. In case of warrants. VI. The Company shall place a copy of the certificate of its statutory auditor before the general meeting of the shareholders. certifying that the issue is being made in accordance with the requirements as specified in the SEBI (ICDR) 2009 guidelines Where specified securities are issued on a preferential basis to promoters.in till the time such amount is paid by the allottees. . VIII.

. Subject to maximum of 20% of the total capital (including the preferential issue) Equity shares allotted in excess of 20% specified securities allotted on preferential basis to persons other than promoter and promoter group and the equity shares allotted pursuant to exercise of options attached to warrants issued on preferential basis The lock-in of equity shares allotted pursuant to conversion of convertible securities other than warrants.In case the warrant holder does not exercise the option to take equity shares against any of the warrants held by him. Lock-in of specified securities Situation Allotment to promoters is to be locked in. one year from the date of their allotment shall be reduced to the convertible securities have already been locked-in extent the 6 months from the relevant date. the consideration already paid by such warrant holder in respect of such warrant shall be forfeited by the Company. issued on preferential basis . Tenure of Conversion The tenure of the convertible securities of the company shall not exceed eighteen months from the date of their allotment. The entire pre-preferential capital held by the allottees Lock-in Period 3 years from allotment of the specified securities or equity shares allotted pursuant to exercise of the option attached to warrant 1 year from allotment pursuant to the exercise of the option.

13. Dispatch the general meeting notice together with explanatory statement at least 21 clear days before the date of general meeting. 2 shall be filed within 30 days of allotment with the concerned Registrar of Companies after paying the requisite fees. 10. 6. • Proposed time within which the allotment shall be completed • Identity of the proposed allottees and the percentage of post-preferential issue capital that may be held by them. Points to consider Hold Board Meeting as per the provisions of Companies Act. • Shareholding pattern before and after the offer. 9. Explanatory statement shall state the following: • Object of the Issue • Intention of the Promoters/directors/key management personnel to subscribe to the offer. 11. valuation of assets in consideration for the shares are proposed to be issued shall be done by an independent valuer and the Valuation report shall be submitted to Stock Exchange on which the shares of the Company are listed. their relatives. The Statutory auditors shall certify that the issue of said instruments is being made in accordance with the requirements of ICDR guidelines.No 1. time. 3. Inform the Stock Exchange by fax/ letter/telegram within 15 minutes of conclusion of Board meeting as per the Listing Agreement. General meeting shall be held to pass a Special resolution for issue of securities on preferential basis. Copies of the auditors certificate shall also be laid before the meeting of the shareholders convened to consider the proposed issue. 2. Form no 23 shall be filed to ROC within 30 days of passing of resolution along with the requisite fees. place and agenda for calling a general meeting for getting shareholders approval. 7. Disclosure in Balance Sheet: 4. 5. associates and related entities. . In case of preferential allotment to promoters. for consideration other than cash. 15. 3 copies of notice of the meeting should be sent to Stock Exchange at the same time of dispatch to shareholders. The Company shall apply for in principal approval in terms of clause 24(a) of the listing Agreement along with the requisite fees. Allotment pursuant to resolution passed at a meeting of shareholders of a co granting consent for preferential issues shall be completed within 15 days from the date of passing of resolution If pending on account of any approval by any regulatory authority or Central Govt. 14. 1956 to consider the preferential issue and to fix the date. The copy of the proceedings of the general meeting shall be forwarded to Stock exchanges promptly. 8. Within 15 days from the date of general meeting.PROCEDURE S. conduct the board meeting to allot the specified securities A return of allotment in Form No. 15 days will be extended accordingly. Price at which the preferential issue is proposed to be done shall be specified in the resolution. 12.

The auditors should specifically mention in detail about the relevant date. Certified true copies of the proposed allottee(s) letter addressed to the Company in which they have given consent for subscribing to the proposed issue of aforesaid securities should be submitted. Certificate from the auditors of the Company certifying that the pricing of the shares issued on preferential basis. File documents for listing of shares with the Stock Exchange CHECKLIST OF DOCUMENTS REQUIRED FOR IN PRINCIPAL APPROVAL AT BSE S. 2. dated the 8 April. . Company‟s intimation as to that the proposed equity shares to be issued on preferential basis would be ranking parri-passu in all respect including dividend with the existing equity shares of the company.16. 6. average of weekly high and low of the closing price of the shares quoted on the Stock Exchange during 26 weeks and two weeks preceding the relevant date. A certification from a Managing Director of the company that the proposed allotment of securities does not violate clause 40A of the Listing Agreement and the Company continue to maintain the non-promoter holding in the Company as per clause 40A.The proposed allottees of the aforesaid securities have not sold/transferred any equity shares during the six months period prior to the relevant date. 3. 5. A certified true copy of the resolution passed by the Board of Directors in which the company has propose to issue securities on a preferential basis.No Checklist of Documents 1.The company has complied with the lock-in requirements as required under Clause 13. Details of the end use of the proceeds to be raised through the preferential issue.The proposed allottees of the aforesaid securities are holding their existing shares only in the dematerialized form. A certificate from the Managing director as well as the Auditors of the Company should be submitted specifically that: . 7. The details of the money utilized out of the preferential issue shall be disclosed under the appropriate head in the balance sheet of the Company indicating the purpose for which such monies have been utilized. 8.1(g) of Amendments to SEBI (DIP) Guidelines. . The details of unutilized monies shall be disclosed under a separate head in the balance sheet of the company indicating the form in which such unutilized monies have been invested. 2004 and the details of the lock in equity shares are as under: The certificate should be in the following Proforma: Name of Allottees Total No of shares Date of Lock in From To th 4. The company should obtain the confirmation letters from the NSDL/CDSL specifically mentioning that they have frozen/kept the entire pre-preferential allotment shareholding of the allottees of the aforesaid securities as lock-in as per SEBI (ICDR) 2009 guidelnes and the certified true copies of the same should be filed with the Exchange. . is as per the SEBI (ICDR) guidelines.3.

Names of the Companies under same management within the meaning of section370 of the Companies Act. 1997 of the SEBI”. Names of the Companies. 10. 14. address together with their PAN/GIR Numbers of the allottees of these shares should be submitted . 1956. The proposed preferential issue of shares and allotment made does not/ does require (strike off which is not applicable) the acquirer to make an open offer under the said regulations”. A printed copy of the notice issued to the shareholders of the Company convening the EGM/AGM alongwith with Auditors Certificate regarding pricing of submitted at the time of the EGM/AGM for shareholders approval should be submitted. 12.9. 13. 1956. firms of other parties listed in the register maintained under section301 of the Companies Act. Latest profile including business activities as well as a latest annual report of the company shall be submitted. 15. 11. Name. The Managing Director of the Company shall certify the following: “ That the proposed preferential issue to be made by the company is in accordance with the provisions of the SEBI (SAST) Regulations. Name and addresses of the Directors of the allottee company should be submitted.

. 18.16. A certificate from the Managing Director as well as Auditors of the Company should be submitted certifying that the company has complied with all the provisions/guidelines issued by SEBI under the preferential issue guidelines and further the company has complied with all the legal and statutory formalities and no statutory authority has restrained the company from issuing the propose shares. Name of the Stock Exchanges where the shares of the company are listed. 17. Resolution passed under section 81(1A) of the companies act. passed by the shareholders of the Company.

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