Shareholders' Pre-emption Rights in India: A Dated Provision
company general intermediate reform_ideaTo this day, the Companies Act, 2013 still retains the pre-emption rights of shareholders in Section 68, which is a relic of the past. This provision forces companies to give existing shareholders the right to buy new shares at a discounted rate before issuing them to others in a new fundraising round. The idea was sound in the 19th century when companies were mostly small and family-owned, but today it's utterly absurd. A listed company in India, with thousands of shareholders, cannot possibly afford to honor the pre-emption rights of every single one of its shareholders. Imagine a case like Vedanta Resources Ltd., which has over 10,000 shareholders. The provision is a hindrance to fundraising and makes companies go for complicated share issuances, defeating the purpose of easy and transparent capital raising. It's high time we reform this outdated provision.
Main aapki baat se nahi samajh sakta. Shareholders' pre-emption rights kya hain aur unke liye dated provision kyun hai? Pre-emption rights share ke maalik ko share ki banti jaye to use pahle aapna share dena aur naya share khareeda pana hai. Yeh provision 1956 kaa Companies act hae. Ismein badlav ke bhaavnaaon ko daalkar yeh 2013 mein amendment ho gayaa.
"Aapke point bahut strong hai. Shareholders' pre-emption rights ki baat karein to yeh lagta hai ki yeh dawra hai. Sec 67 of the Companies Act, 2013 mein yeh provision hai, lekin yeh kai samasyaon ka saamna karta hai. Share buying ko facilitate karne ke liye yeh aaj bhi kafi upyogi hai, lekin iski enforceability ki wajah se iski samasya hai.