what does the term pari passu means? can a company issue debentures with pari passu clause?
preetika (student) 22 January 2011
what does the term pari passu means? can a company issue debentures with pari passu clause?
Pari Passu
Equal in all respects, at the same pace or rate, in the same degree or proportion, or enjoying the same rights without bias or preference. If a new issue of shares (stock) is said to rank pari passu with the existing shares, then the rights associated with both issues are exactly the same. Latin for, with equal steps.
1. Pari Passu = Equivalent in all respects.
Provided shares are issued, before book-closure.
2. New share shall be treated in Equivalence with old shares, for purposes of all benefits, i.e. for rights issue, bonus issue, dividends, gifts, premium etc....
logical example
a) xyz holds shares since last 5 years. He gets full dividend etc...
b) abc buys shares from market, just 7 days before book closure. He too gets full dividend etc...
Irrespective of period of holding.
c) proportionate to their period of holding NOT APPLICABLE under Co. Act.
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