Deepak Gupta | Aug 9, 2016 |
PROCEDURE FOR RIGHT ISSUE OF SHARES UNDER COMPANIES ACT, 2013
PROCEDURE FOR RIGHT ISSUE OF SHARES
Meaning of Right Share of Issue: Right Issue means offering shares to existing members in proportion to their existing shareholding through letter of offer.
When the rights are for equity securities, such as shares, in a public company, it is a non-dilutive pro rata way to raise capital.
Governing Section : SECTION 62 of Companies Act 2013
STEP Procedure for RIGHT ISSUE OF SHARES
| STEPS INVOLVED | FOR PRIVATE COMPANY | FOR PUBLIC COMPANY |
| Step 1 | Issue the notice of Board Meeting At least 7 days before the meeting as per section 173 (3) | Issue the notice of Board Meeting At least 7 days before the meeting as per section 173-(3) |
| Step 2 | Hold the Board meeting as Per SS 1 pass the board resolution for approval of draft letter of offer | Hold the Board meeting as Per SS 1 and SS 2 and pass the board resolution for approval of draft letter of offer |
| Step -3 | Dispatch Letter of offer through registered post or speed post or through electronic mode to all the existing share holders. – | Dispatch Letter of offer through registered post or speed post or through electronic mode to all the existing shareholders. – |
| Step -4 | As per Section 62 (2)Letter of Offer must be sent at least 3 day before the opening of issue but Notification dated 05.06.2015 Says notice can be sent even lesser than three days before the issue opens, if 90% of the members agree in writing (consent can be even by electronic mode). Time period of Open of subscription: As per section 61 (1) (a) The offer shall remain open for subscription for minimum 15 days and maximum 30 days but Notification date 05.06.2015 says if 90% of the members agree in writing (consent can given by electronic mode) then the offer can be kept open for lesser than 15 days. | As per section 62 (2) Letter of Offer must be sent at least 3 day before the opening of issue Time period of Open of subscription: As Per 61 (1) (a) The offer shall remain open for subscription for minimum 15 days and maximum 30 days |
| Step 5 | NOT APPLICABLE | File MGT-14 within a 30days from date of passing Board Resolution. Attachment: CTC-of Board Resolution for issue of Letter of Offer. |
| Step 6 | Receive Application Money Note : In Right Issue application of money through CASH is Allowed | Receive Application Money Note : In Right Issue application of money through CASH is Allowed |
| Step -7 | Call Second Board Meeting after received application money 1.Issue Notice Of Board Meeting at least 7 days before the date of Board Meeting As per section- 173 (3), attach Agenda and notes along with Notice HOLD BOARD MEETING: As Per SS1, Represent the list of Allottee and Pass the Board Resolution for Allotment of Shares | Call Second Board Meeting after received application money 1.Issue Notice Of Board Meeting at least 7 days before the date of Board Meeting As per section- 173 (3), attach Agenda and notes along with Notice HOLD BOARD MEETING: As Per SS1, Represent the list of Allottee and Pass the Board Resolution for Allotment of Shares |
| Step -8 | File PAS-3 within a 30days from the date of Allotment. Attachment : 1.CTC of Board Resolution for Allotment of Shares 2. List of Allottee | File PAS-3 within a 30days from the date of Allotment. Attachment : 1.CTC of Board Resolution for Allotment of Shares 2. List of Allottee |
| Step 9 | Issue Share Certificate Within 2 Month From date of Allotment Authorise Two Director along with One Authorizes representative to Sign Share Certificate and Issue Share Certificate in SH-1 | Issue Share Certificate Within 2 Month From date of Allotment Authorise Two Director along with One Authorizes representative to Sign Share Certificate and Issue Share Certificate in SH-1 |
| Step 10 | GET the Share stamp from SDM Department within a 30days from date of ISSUE | GET the Share stamp from SDM Department within a 30days from date of ISSUE |
For Board Resolution formats Contact on below mentioned details
Author CS Lily Bali ,ACS is a Company Secretary from Delhi/NCR and can be contacted at cslilybali@yahoo.com, Contact Number : 9711772751
RIGHT ISSUE OF SHARES UNDER COMPANIES ACT, 2013,PROCEDURE FOR RIGHT ISSUE OF SHARES, RIGHT ISSUE OF SHARES
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