Allotment of shares is a structured process. Shares can be issues on the basis of  1.Rights Issue,  2.Private placement &  3.Preferential Allotment. Articles of Association of the company must not restrict the right to make such allotment and also authorised capital of the company must have the limit to allot the required shares. The procedure of allotment of shares can be a time consuming with need to meet compliances at every step.

Under Rights Issue, with the approval of Board, shares are issues to the existing shareholders of the company in the proportion of their current shareholding by issuing a letter of offer in this regard. The offer shall be open for a period not less than 15 days & not exceeding 30 days long with the rights of renunciation. This offer period can be reduced in case of Private Company with the consent of ninety percent of members of the company. 

Whereas, Preferential Allotment refers to the allotment to any person being an existing shareholder or an outsider, whether for cash or for a consideration other than cash. The price of such shares shall be determined by the valuation report.