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Can a private company offer its shares to the public?
Can a private company offer its shares to the public?
Whether it is for day to day operation or to serve expansion goal of a private company it should have enough profit for further investment or have to raise funds. If profit is insufficient to serve the financial requirements, it has to raise a loan or could get fund by way of issue of shares.
There are financial institutions where a company can get loan. This depends on the company’s intention whether to raise debt fund or share capital offering its shares.
If a company wishes to issue its shares, can it ask public to subscribe its shares?
No,
Private company can not make offer to subscribe its shares to public or sell shares in market.
Section 23 of the companies states that only public companies at its discretion can offer and sale its shares to the public.
How a private company increase its paid up share capital?
As per section 23, a private company may issue its securities through;-
- Bonus shares
- Right issue of shares to existing share holders
- Private Placement of shares
- ESOP
In our next article, we will discuss in detail on the "Right Issue of Share" and procedures involved.
If you have any quaries please feel free to comment.
