Step by Step Procedure for Right Issue of Shares - SAG RTA

Author: William Damians

Right Share of Issue states that shares are being offered to the currently existing members in relevance to their current shareholding via the letter of offer.

The Right Issue of Shares Under Companies is done on the basis of the current holding of each shareholder in the company and hence distributed accordingly. Also, the company ask the shareholders to buy the shares in the set limit of time.

The company further takes the route of the right issue in order to pay the debt of its own by raising the funds. Section 62 of Companies Act, 2013 mentioned provisions on "further issue of capital".

The section sheds light on the pre-emptive rights of shareholders of a company to subscribe to new shares of the company. Also to note that Section 62 of Companies Act, 2013 is compulsory for all the Private companies, public companies, listed as well as unlisted companies.

STEPS INVOLVED

FOR PRIVATE COMPANY

FOR PUBLIC COMPANY

Step 1

Issuance of the notice of Board Meeting at least 7 days prior the meeting as per the norms of section 179-(3)

Issuance of the notice of Board Meeting at least 7 days prior the meeting as per the norms of section 179-(3)

Step 2

Summon the Board meeting as Per SS 1 to pass a board resolution for approving "Letter of offer" which should encompass right of renunciation also.

Summon the Board meeting as Per SS 1 to pass a board approving "Letter of offer" which should encompass right of renunciation also.

Step 3

Send the Letter of offer to all the existing shareholders via registered post or speed post or electronic mode

Send the Letter of offer to all the existing shareholders via registered post or speed post or through electronic mode

Step 4

Section 62 (2) states that the Letter of Offer must be posted at least 3 days earlier then the date of opening of issue but after Notification dated 05.06.2015 Condition given that notice can be sent even lesser than three days before the issue opens, when 90% of the members give their consent in writing ( even by electronic mode).

Time period of Open of subscription: As per section 61 (1) (a) The offer shall remain valid for the subscription for at least 15 days and at most 30 days but Notification date 05.06.2015 approves the offers to be kept open for less than 15 days when 90% of the members give consent in writing (even by electronic mode).

Section 62 (2) states that the Letter of Offer must be posted at least 3 days earlier then the date of opening of issue.

Time period of subscription: As Per 61 (1) (a)The offer shall remain valid for the subscription for at least 15 days and at most 30 days

Step 5

NOT APPLICABLE

File MGT-1 in a period of 30 days from the date of passing Board Resolution.

Attachment: CTC-of Board Resolution for the issue of Letter of Offer.

Step 6

Accept Application Money ( cash money is permitted here)

Accept Application Money (cash money is permitted here)

Step 7

Convene the Second Board Meeting after receiving application money

1. Send Notice Of Board Meeting minimum 7 days before the date of Board Meeting As per section- 173 (3), attest Agenda and notes with Notice

CONVENE BOARD MEETING: As Per SS1, Show the list of Allottee and Pass the Board Resolution for Allotment of Shares

Convene the Second Board Meeting after receiving application money

1. Send Notice Of Board Meeting minimum 7 days before the date of Board Meeting As per section- 173 (3), attest Agenda and notes with Notice

CONVENE OR HOLD BOARD MEETING: As Per SS1, Show the list of Allottee and Pass the Board Resolution for Allotment of Shares

Step 8

File PAS-3 within a 30 days period from the date of Allotment coupled with CTC of Board Resolution for Allotment of Shares and List of Allottee.

File PAS-3 within a 30 days period from the date of Allotment coupled with CTC of Board Resolution for Allotment of Shares and List of Allottee.

Step 9

Issue Share Certificate

In the period of 2 Month From date of Allotment

Empower two Directors in addition to One Authorized representative to Sign Share and Issue Share Certificate in SH-1

Issue Share Certificate

In the period of 2 months From date ofAllotment

Empower two Directors in addition to One Authorized representative to Sign Share and Issue Share Certificate in SH-1

Step 10

Obtain the Share stamp from SDM Department within a period of 30 days from date of ISSUE

Obtain the Share stamp from SDM Department within a period 30 days from date of ISSUE