04-19-2010, 09:36 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Star</i>
<br />Thanks for the worthiest comments.
I personally agree with the views and interpretation of Kamran Sahab. The meaning of company in the Rules is not clear and required inerpretation.
I also agree with the suggestion that the person with controlling stake in the company, may sell the shares in the market. But the continous sale of shares in the market, will definately impact the share price negatively. This would not be beneficial for the seller. If the market value of shares is say 26 Rs. at the start of selling, it may fall upto even low than 50% by such a huge volume of selling.
Regards,
*
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Dear Star,
The most prominent features of a private company are restriction on the transfer of shares by its member and a private company cannot offer its share to general public. As you may see the definition of private company given in the Companies Ordianance, 1984 (see Clause 1 of sub section 28 of section 2). For more clarity consult the other definitions of Private Company in Legal Dictionaries, General Books written on corporate laws and definition mentioned by prominent legal personalities including judges.
Some definition are as follows
Private company means a limited company that does not issue shares for public subscription and whose owners do not enjoy an unrestricted right to transfer their shareholdings Compare public company
A private company limited by shares, usually called a private limited company (though this can theoretically also refer to a private company limited by guarantee), is a type of company incorporated under the laws of England and Wales, Scotland, that of certain Commonwealth countries and the Republic of Ireland. It has shareholders with limited liability and its shares may not be offered to the general public, unlike those of public limited companies. (Wikpedia)
If a private limited company itself cannot issue share to general public how a member of private company can issue shares to general public. Issuance of shares to general public means that hundreds of people can purchase shares of a company but the maximum number of members of private limited company is fifty (50) see sub section 28. Additionally under section 45 of Companies Ordinance if a private company wants to issue its share general public then it shall must be converted into public company.
In my opinion it is crystal clear that Rule 9 of Companies (Issue of Capital) Rules, 1996 deals with the public companies.
A person holds the share of a listed company at any time can sale them in stock exchange or any buyer. But law facilitate the persons who holds huge holdings (for instance more than 10%) in a public company.
I agree with you that if huge shares of a company are offered for the sale in the market then the prices may fall. But at the same time there may be possibility that price or value of share will remain stable. Besides this statement can also be given regarding subsequent issue of shares by a company to general public. Another factor of the entire scenario is that law facilitates all groups of society in case a person who has invested huge funds in a company is facilitated by law to sale out his holdings to general public. <b>In my opinion the law protects the prices of shares of a company by giving a right to a shareholder (who holds more than 10% shares of a company) to sale out them to general public . Contrarily if such huge shares are taken in market for sale then the price of shares of the company will definitely effected adversely.</b>
Regards,
Awais Aftab
<br />Thanks for the worthiest comments.
I personally agree with the views and interpretation of Kamran Sahab. The meaning of company in the Rules is not clear and required inerpretation.
I also agree with the suggestion that the person with controlling stake in the company, may sell the shares in the market. But the continous sale of shares in the market, will definately impact the share price negatively. This would not be beneficial for the seller. If the market value of shares is say 26 Rs. at the start of selling, it may fall upto even low than 50% by such a huge volume of selling.
Regards,
*
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Dear Star,
The most prominent features of a private company are restriction on the transfer of shares by its member and a private company cannot offer its share to general public. As you may see the definition of private company given in the Companies Ordianance, 1984 (see Clause 1 of sub section 28 of section 2). For more clarity consult the other definitions of Private Company in Legal Dictionaries, General Books written on corporate laws and definition mentioned by prominent legal personalities including judges.
Some definition are as follows
Private company means a limited company that does not issue shares for public subscription and whose owners do not enjoy an unrestricted right to transfer their shareholdings Compare public company
A private company limited by shares, usually called a private limited company (though this can theoretically also refer to a private company limited by guarantee), is a type of company incorporated under the laws of England and Wales, Scotland, that of certain Commonwealth countries and the Republic of Ireland. It has shareholders with limited liability and its shares may not be offered to the general public, unlike those of public limited companies. (Wikpedia)
If a private limited company itself cannot issue share to general public how a member of private company can issue shares to general public. Issuance of shares to general public means that hundreds of people can purchase shares of a company but the maximum number of members of private limited company is fifty (50) see sub section 28. Additionally under section 45 of Companies Ordinance if a private company wants to issue its share general public then it shall must be converted into public company.
In my opinion it is crystal clear that Rule 9 of Companies (Issue of Capital) Rules, 1996 deals with the public companies.
A person holds the share of a listed company at any time can sale them in stock exchange or any buyer. But law facilitate the persons who holds huge holdings (for instance more than 10%) in a public company.
I agree with you that if huge shares of a company are offered for the sale in the market then the prices may fall. But at the same time there may be possibility that price or value of share will remain stable. Besides this statement can also be given regarding subsequent issue of shares by a company to general public. Another factor of the entire scenario is that law facilitates all groups of society in case a person who has invested huge funds in a company is facilitated by law to sale out his holdings to general public. <b>In my opinion the law protects the prices of shares of a company by giving a right to a shareholder (who holds more than 10% shares of a company) to sale out them to general public . Contrarily if such huge shares are taken in market for sale then the price of shares of the company will definitely effected adversely.</b>
Regards,
Awais Aftab
