Raj Mani Hadlooms Ltd., an unlisted Public Company, having paid-up Capital of ₹18 Crore, has seven Members. Shri Raj and Shri Mani are the Promoters of the company and their aggregate holding in the paid-up Capital is 95

1. Rights Issue vs. Other Methods: It is not mandatory for a company to make a rights issue to implement a capital raising programme. The company may opt for other methods of capital raising such as preferential allotment or private placement, subject to compliance with the relevant provisions of the Companies Act, 2013. 2. Use of Share Capital Advance: In the case of an allotment by way of private placement of shares, the proviso under Section 42(6) of the Companies Act, 2013, states that the money received with share application should not be utilised except for adjustment against allotment of securities or for refund arising from failure to allot securities. Therefore, if the company plans a preferential allotment or private placement of shares, the amount received as share application money cannot be utilised prior to allotment . If shares are not allotted, the money must be returned. However, this provision does not apply to a Rights Issue. 3. Determination of Fair Price for Preferential Allotment to Promoters: For the purpose of issuing securities on a preferential allotment basis to the promoters alone, it is mandatory that the fair price of the shares must be determined. This ensures transparency and protects the interests of other shareholders.