issue of Shares on Rights basis by Unlisted Public Company


Dear All,

I hereby request the experts in this forum to guide me on the following: An unlisted public company has offered to its members for allotment of shares on Rights basis. As per the recent MCA guidelines issued issued under the Rule 9A (2) of The Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018, wherein it was expressly stated as - “Every unlisted public company making any offer for issue of any securities or buyback of securities or issue of bonus shares or rights offer shall ensure that before making such offer, entire holding of securities of its promoters, directors, key managerial personnel has been dematerialised in accordance with provisions of the Depositories Act, 1996 and regulations made there under”.

However on the date of offer i.e. Record date about 70 out of 169 promoters (viz. about 42%) are yet to complete the Demat process. On completion of the issue period the company conducted a board meeting and issued the shares on rights basis to all those members who applied for shares in such Rights Issue. Funds collected were transferred to the company's current account from the Escrow account.

Is such allotment valid as per law? What is the recourse we have to take action against the management of the company? One of the investors has filed an official complaint with the ROC however there was no action from the ROC.
 
Reply   
 
ha21@rediffmail.com Mumbai : 9820174108

1.  What is the punishment /corrective recourse prescribed in the Act & Rules.

2.  Would the allotment of Shares get null & void, due to non-compliance of the "demat" criteria (anticipatively due to procedure lapses .... )

3.  Is there any restrictions /bar to the Co. /Promoters /others .... to now convert their physical holdings into Demat.

4.  Was there any wrongful loss to the Share holders or any wrongful gain to the Co. /Promoters /others ....

5.  IF the answers to all above is "NO", THEN no prosecution will lie against the said Share allotment.

Keep Smiling .... Hemant Agarwal
VISIT: www.chshelpforum.com

 

 
Reply   
 


LEAVE A REPLY


    

Your are not logged in . Please login to post replies

Click here to Login / Register  



 

Search Forum:








×

  LAWyersclubindia Menu