Critically examine the following: There is no mandatory provision for disclosure by issuer to its shareholder in case of preferential issue.

Examination: The statement is incorrect. Regulation 163 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, deals with the disclosures by issuer to Shareholders in case of preferential issue. This regulation mandates specific disclosures. The issuer shall, in addition to the disclosures required under the Companies Act, 2013 or any other applicable law, disclose the following in the explanatory statement to the notice for the general meeting proposed for passing a special resolution: The objects of the preferential issue. Maximum number of specified securities to be issued. Intent of the promoters, directors or Key Managerial Personnel of the issuer to subscribe to the offer. The shareholding pattern of the issuer before and after the preferential issue. The time frame within which the preferential issue shall be completed. The identity of the natural person who are the ultimate beneficial owners of the shares proposed to be allotted and/or who ultimately control the proposed allottees, the percentage of post preferential issue capital that may be held by them and change in control, if any, in the issuer consequent to the preferential issue. However, if there is any listed company, mutual fund, bank or insurance company in the chain of ownership of the proposed allottee, no further disclosure will be necessary. An undertaking that the issuer shall re-compute the price of the specified securities where it is required to do so. An undertaking that if the amount payable on account of the re-computation of price is not paid within the time stipulated, the specified securities shall continue to be locked-in till the time such amount is paid by the allottees. Disclosures as specified, if the issuer or any of its promoters or directors is a wilful defaulter. Therefore, there are mandatory provisions for disclosure by the issuer to its shareholders in case of a preferential issue.