By virtue of Section 8], the existing equity shareholders

By virtue of Section 8], the existing equity shareholders of a Offer must be made to the present equity shareholders on a pro

rata basis, i.e., in proportion to their shareholdings.

2. The pro-rata offer is to be made by giving a notice specifying the

number of shares offered.

3. The offer must be kept open for a period of at least ]5 days or for

such long period as may be specified in the notice. .

4. The member must also be given the right of renunciation of the

offer in favour of his nominee. unless the articles provide otherwise.

After the expiry of the time specified in the notice aforesaid or on receipt of earlier intimation from the shareholder to whom such notice is given that he

declines to accept the shares offered, the Board of directors may dispose them off in such manner as they think most beneficial to the company.

Offer {)f New Shares to Outsiders-Exceptions to Sec. 81 (See, 81 (A»). According to See 81 (I A), a company may offer shares to the outsiders to the total

exclusion of existing shareholders in any manner vhatsoever. in the following case!i

(i) Where shareholders pass a special resolution in the general meeting that the new shares may be offered to any person without showing any

preference to the existing shareholders; or

(ii) if an ordinary resolution is passed to that effect and approval of the Central Government is obtained on the ground that such an offer is most beneficial

to the company;

(iii) if the new shares are issued within 2 years from the formation of the company or 1 year of the allotment made for the first time.