Analysis of SAT order: The Canning Industries Cochin Ltd. v. SEBI- Preferential Allotment V. Public Issue
Manner of issuance of securities to select group of persons has always been a debatable topic. It has always been dubious that what compliances are required to be adhered to. Like, in case of issuance of preference shares Section 55 of the Companies Act, 2013 (hereinafter referred as ‘2013 Act’) stipulates complete set of requirements and conditions to be fulfilled for its issuance, but at the same time Section 62 read with Rule 13 of the Companies (Shares Capital and Debentures) Rules, 2014 (hereinafter referred as Shares and Debenture Rules) becomes applicable in case it is convertible preference shares. And in cases, where it is an issue of non-convertible preference shares to select group of persons, then Section 42 of the 2013 Act read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (hereinafter referred as Allotment Rules) required to be complied with.
Same is in the case of issuance of debentures, whether compliance of only Section 71 of the 2013 Act, and rules made thereunder will suffice the purpose or Section 62(1)(c) or 42 of the 2013 Act, as the case may be also be adhered to.
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