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If a private company offers right shares to its existing shareholder, can all the shareholders renounce their shares to non members resulting the allotment in favour of only new member. If it is allowed then who will do private placement in private company which has such a long procedure and a lot of conditions like valuation of shares and minimum offer of shares/allotment of not less than Rs.20000 of face value.

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Posted By: Anita 9 year(s) ago

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Arpitha

Yes

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Anupama

If any company proposes to issue new shares (except a rights issue to existing shareholders or to employees under employees stock options), the price of such shares should be determined by the valuation report of a Registered Valuer. I think valuation is not required for rights issue.

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Amruta Tendulkar

Yes it is allowed. You can issue shares on rights basis and need not follow private placement procedure. However you will still have to get the valuation done.

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Ankit Singhi

there is no requirement of valuation

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