Preferential Allotment — Offer to Any Person [Section 62(1)(c)]
# Offer to Any Person (Preferential Allotment) — Section 62(1)(c)
## Meaning
A company may issue further shares to any person (whether or not those persons include existing shareholders or employees), if authorised by Special Resolution.
## Conditions to Be Satisfied
### 1. Special Resolution (SR)
A Special Resolution of the members must be passed authorising the issue.
### 2. Consideration
The shares may be issued for:
Cash, OR
Consideration other than cash (e.g., assets, services, intellectual property).
### 3. Valuation Report
The price of such shares must be determined by a valuation report of a Registered Valuer (RV).
(Refer Section 247 — Valuation by Registered Valuers.)
## Key Point
Unlike a rights issue, this is a selective issue — the company chooses to whom shares are offered. The SR + valuation report safeguards are designed to protect minority shareholders from unfair dilution.
Worked example
### Example 1
Example 1 (Cash): ABC Ltd. wants to issue 10,00,000 shares to a private equity investor at ₹150 per share.
Pass SR.
Obtain valuation report from Registered Valuer certifying fair value.
Allot shares.
### Example 2
Example 2 (Other than cash): XYZ Ltd. acquires a piece of machinery from Mr. P and issues 50,000 shares as consideration.
Pass SR.
Obtain RV's valuation of (i) the machinery, and (ii) the shares being issued.
Allot shares against the asset.
⚠️ Common exam mistakes
Treating an Ordinary Resolution as sufficient — Special Resolution is mandatory.
Skipping the Registered Valuer's report — it is mandatory whether consideration is cash or non-cash.
Confusing this with rights issue — preferential allotment does NOT follow the 'proportionate to existing shareholding' rule.
Bare-Act text Section 62(1)(c) · Companies Act, 2013 · click to expand
Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares may 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.