Write short notes on the following: Right issue Vs. Preferential issue.

Right Issue: The right issue is governed through Section 62(1)(a) of Companies Act 2013. It is an offer provided to the existing shareholders in proportion to their existing shareholding in the share capital of the company. No specific format has been prescribed for Offer letter. Only board approval through Board Meeting is required. Offer period remains open for the minimum period of 15 days and maximum period of 30 days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined. Company shall allot the shares within 60 days of receipt of application money. No need for a valuation report. Shareholders under this option have right to renounce, reject or approve the offer letter. Preferential Issue: Preferential issue is governed through Section 62(1)(c) read with Section 42 of the Companies Act 2013. "Preferential Offer" means an issue of shares or other securities, by a company to any select person or group of persons on a preferential basis and does not include shares or other securities offered through a public issue, rights issue, employee stock option scheme, employee stock purchase scheme or an issue of sweat equity shares or bonus shares or depository receipts issued in a country outside India or foreign securities. Both board resolution and special resolution is needed to approve preferential issue. No specific provision for offer period is specified in the Companies Act, 2013. Letter of offer shall be as per the prescribed format in PAS-4 and record of preferential offer in PAS-5. The allotment of securities on a preferential basis made pursuant to the special resolution is required to be completed within a period of twelve months from the date of passing of such special resolution. If the allotment of securities is not completed within twelve months from the date of passing of the special resolution, another special resolution shall be passed for the company to complete such allotment thereafter. The price of the shares or other securities to be issued on a preferential basis, either for cash or for consideration other than cash, shall be determined on the basis of valuation report of a registered valuer.