Preferential Allotment to Any Person [Section 62(1)(c)]
# Further Issue to Any Persons (Including Non-Members) — Section 62(1)(c)
## Concept
A company can issue further shares to any persons — whether existing members or outsiders — if so authorised by a special resolution.
This route is independent of Sections 62(1)(a) (rights issue) and 62(1)(b) (ESOS).
## Modes of Consideration
Shares under this clause may be issued:
For cash, OR
For consideration other than cash
## When Consideration is Other Than Cash
The price must be determined by a valuation report of a Registered Valuer, subject to conditions in Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014.
## Key Principle
Section 62 does not prohibit issue of further shares to non-members in absolute terms. A company may legitimately do so by passing a special resolution. This is a recognized exception to the pre-emptive rights principle.
Worked example
### Example 1
Example 21 (from text): A company listed at the Bombay Stock Exchange intends to offer its further shares to non-members. Existing members object, claiming this violates Section 62(1)(a). However, the company is not absolutely prohibited from doing so — it can validly offer further shares to non-members by passing a special resolution as required under Section 62(1)(c). Hence, new shares of a company limited by shares may be issued to non-members under this route.
### Example 2
Example: PQR Ltd. wants to acquire a piece of land worth ₹50 lakh. Instead of paying cash, it proposes to issue 5,00,000 equity shares of ₹10 each to the landowner. This is permitted under Section 62(1)(c) provided: (i) a special resolution is passed, and (ii) the share price is determined by a Registered Valuer as per Rule 13.
⚠️ Common exam mistakes
Assuming Section 62 absolutely prohibits offering shares to outsiders without first offering to existing shareholders — Section 62(1)(c) is an explicit exception.
Forgetting the requirement of a Registered Valuer's report when consideration is non-cash.
Confusing the resolution required — Section 62(1)(c) always requires a special resolution (no private-company relaxation as in ESOS).
Treating the persons under clause (c) as mutually exclusive from clauses (a) and (b) — the section explicitly says 'whether or not those persons include the persons referred to in clause (a) or clause (b)'.
Bare-Act text Section 62(1)(c) of the Companies Act, 2013 · The Companies Act, 2013 · click to expand
Section 62(1)(c): Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered to any persons, if it is authorised by a special resolution, whether or not those persons include the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer subject to such conditions as may be prescribed.