A Preferential issue is an issue of shares or of convertible securities by listed companies to a select group of persons under Section 81 of the Companies Act, 1956 which is neither a rights issue nor a public issue.

This is a faster way for a company to raise equity capital. The issuer company has to act in accordance with the Companies Act and the requirements pertaining to preferential allotment in SEBI guidelines which inter-alia include pricing, disclosures in notice etc.


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