Guidance Note on Preferential Issue of Shares
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About the Book:
Preferential issue is a way of infusing fresh capital into the business expeditiously and cost effectively and sometimes with no lock-in period. Although mostly perceived as an easy route for promoters to increase their stake at less than the market price, in the recent times, a spate of companies have adopted preferential issue to injecting capital into their business to finance the various activities and invite strategic investors. From the investors’ point of view, the fact that promoters wish to increase their stake is a signal that the company has potential to grow.
Preferential issues backed by adequate disclosures have gained impetus in recent times in view of the benefits derived therefrom. However, there are disparate practices by the Issuer Companies. This Guidance Note, as a single referencer to all companies, both listed and unlisted, is aimed at streamlining the practices for making such issues.
This Guidance Note outlines the various aspects of the law, compliance and rules and regulations applicable to companies, both listed and unlisted, for issue of securities on preferential basis. The inclusion of Checklists and specimen resolutions in this Guidance Note adds value and should prove to be of immense benefit to the members of the profession and the corporates.
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