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What "rights issue" do the shareholders of a company have under Companies Act, 1956?

Open uri20170510 32134 7ezpi6?1494421819 jaggu asked almost 3 years ago

Hi I want to know, What "rights issue" do the shareholders of a company have under Companies Act, 1956?

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6 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 acharya answered over 2 years ago

1) Rights attached to shares of any class can be varied with the consent of shareholders holding not less then 75% of issued shares. 2) Rights of Dissenting Shareholders: Protection by Companies Act is given to the shareholders who doesn't consent to or vote for variation of their rights. If there is any variance in any rights of any class of shareholders then holders of not less than 10% of shares of that class can apply to the court to have the variation cancelled. It won't have any affect till it is been approved by the court. 3) Voting rights of the members: - Every member of public company which have the shares holding equity have votes in proportions to his share in paid up equity capital.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered over 2 years ago

2) Rights of Dissenting Shareholders: Protection by Companies Act is given to the shareholders who doesn't consent to or vote for variation of their rights. If there is any variance in any rights of any class of shareholders then holders of not less than 10% of shares of that class can apply to the court to have the variation cancelled. It won't have any affect till it is been approved by the court. 3) Voting rights of the members: - Every member of public company which have the shares holding equity have votes in proportions to his share in paid up equity capital.

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Picsjoin 2017224123730582 Archana answered almost 3 years ago

Hie Jaggu, The rights and duties of shareholders are defined from time to time of issue of shares. The rights of shareholders are fixed which can't be altered unless the Companies Act gets modified. Right issue which shareholders hold of a company under Companies Act, 1956 are as follows:- 1) Rights attached to shares of any class can be varied with the consent of shareholders holding not less then 75% of issued shares. 2) Rights of Dissenting Shareholders: Protection by Companies Act is given to the shareholders who doesn't consent to or vote for variation of their rights. If there is any variance in any rights of any class of shareholders then holders of not less than 10% of shares of that class can apply to the court to have the variation cancelled. It won't have any affect till it is been approved by the court. 3) Voting rights of the members: - Every member of public company which have the shares holding equity have votes in proportions to his share in paid up equity capital. 4) Preference shareholders don't have any voting rights. They can vote only on matters which are directly related to the rights attached to preference share capital. There is a right to vote for every equity shareholder at general meeting. No company can stop any member from his voting right on any ground. The members voting rights can be changed if member doesn't make payment or other sums which are due against.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Mukesh answered almost 3 years ago

Cash-strapped companies can turn to rights issues to raise money when they really need it. In these rights offerings, companies grant shareholders a chance to buy new shares at a discount to the current trading price. Let's look at how rights issue work, and what they mean for all shareholders. Defining a Rights Issue and Why It's Used A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. More specifically, this type of issue gives existing shareholders securities called "rights", which, well, give the shareholders the right to purchase new shares at a discount to the market price on a stated future date. The company is giving shareholders a chance to increase their exposure to the stock at a discount price. But until the date at which the new shares can be purchased, shareholders may trade the rights on the market the same way they would trade ordinary shares. The rights issued to a shareholder have a value, thus compensating current shareholders for the future dilution of their existing shares' value. Troubled companies typically use rights issues to pay down debt, especially when they are unable to borrow more money. But not all companies that pursue rights offerings are shaky. Some with clean balance sheets use them to fund acquisitions and growth strategies. For reassurance that it will raise the finances, a company will usually, but not always, have its rights issue underwritten by an investment bank. How Rights Issues Work So, how do rights issues work? The best way to explain is through an example. Let's say you own 1,000 shares in Wobble Telecom, each of which is worth $5.50. The company is in a bit of financial trouble and sorely needs to raise cash to cover its debt obligations. Wobble therefore announces a rights offering, in which it plans to raise $30 million by issuing 10 million shares to existing investors at a price of $3 each. But this issue is a three-for-10 rights issue. In other words, for every 10 shares you hold, Wobble is offering you another three at a deeply discounted price of $3. This price is 45% less than the $5.50 price at which Wobble stock trades. (For further reading, see Understanding Stock Splits.) As a shareholder, you essentially have three options when considering what to do in response to the rights issue. You can (1) subscribe to the rights issue in full, (2) ignore your rights or (3) sell the rights to someone else. Here we look how to pursue each option, and the possible outcomes. 1. Take up the rights to purchase in full To take advantage of the rights issue in full, you would need to spend $3 for every Wobble share that you are entitled to under the issue. As you hold 1,000 shares, you can buy up to 300 new shares (three shares for every 10 you already own) at this discounted price of $3, giving a total price of $900. However, while the discount on the newly issued shares is 45%, it will not stay there. The market price of Wobble shares will not be able to stay at $5.50 after the rights issue is complete. The value of each share will be diluted as a result of the increased number of shares issued. To see if the rights issue does in fact give a material discount, you need to estimate how much Wobble's share price will be diluted. Read more: Understanding Rights Issues http://www.investopedia.com/articles/stocks/05/062905.asp#ixzz3uwXvqM2c Follow us: Investopedia on Facebook

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 jitendra etikala answered almost 3 years ago

Dear Jaggu, The rights and duties of shareholders are defined from time to time of issue of shares. The rights of shareholders are fixed which can't be altered unless the Companies Act gets modified. Right issue which shareholders hold of a company under Companies Act, 1956 are as follows:- 1) Rights attached to shares of any class can be varied with the consent of shareholders holding not less then 75% of issued shares. 2) Rights of Dissenting Shareholders: Protection by Companies Act is given to the shareholders who doesn't consent to or vote for variation of their rights. If there is any variance in any rights of any class of shareholders then holders of not less than 10% of shares of that class can apply to the court to have the variation cancelled. It won't have any affect till it is been approved by the court. 3) Voting rights of the members: - Every member of public company which have the shares holding equity have votes in proportions to his share in paid up equity capital. 4) Preference shareholders don't have any voting rights. They can vote only on matters which are directly related to the rights attached to preference share capital. There is a right to vote for every equity shareholder at general meeting. No company can stop any member from his voting right on any ground. The members voting rights can be changed if member doesn't make payment or other sums which are due against.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered almost 3 years ago

The rights and duties of shareholders are defined from time to time of issue of shares. The rights of shareholders are fixed which can't be altered unless the Companies Act gets modified. Right issue which shareholders hold of a company under Companies Act, 1956 are as follows: ======================================================================== **1) Rights** attached to shares of any class can be varied with the consent of shareholders holding not less then 75% of issued shares. **2) Rights of Dissenting Shareholders**: Protection by Companies Act is given to the shareholders who doesn't consent to or vote for variation of their rights. If there is any variance in any rights of any class of shareholders then holders of not less than 10% of shares of that class can apply to the court to have the variation cancelled. It won't have any affect till it is been approved by the court. **3) Voting rights of the members**: - Every member of public company which have the shares holding equity have votes in proportions to his share in paid up equity capital. **4) Preferences shareholder** don't have any voting rights. They can vote only on matters which are directly related to the rights attached to preference share capital. There is a right to vote for every equity shareholder at general meeting. No company can stop any member from his voting right on any ground. The members voting rights can be changed if member doesn't make payment or other sums which are due against.

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