Suyog S Kabra

Suyog KabraChecklist for Prefrential Allotment under section 62 Of Companies Act, 2013

1     Existing equity shares in proportion to the paid up capital held by them

2  Procedure to be followed

a. Letter of offer to be sent to existing equity shareholders as notice by registered post /speed post/electronic mode at least 3 days before opening of the issue.

b. Contents of letter of offer: I) Specify number of shares II) time limit of minimum 15 days and maximum 30 days from the date of offer within which the offer if not accepted, would be deemed to have been declined.III) Offer to include a right exercisable by person concerned to renounce the shares offered to him in favor of any other person.

3     On expiry   of period /renunciation, Board may dispose of the shares in a manner not disadvantageous to the Company and shareholders.

4     Ensure that allotment was made within 60 Days from the date of receipt of the share application money to comply with companies ( Acceptance of Deposit ) Rules,2014

5     In case of any preferential offer made by the company to one or more existing members only, the provision of sub rule (1) and proviso to sub rule (3) of rule 14 of companies ( prospectus and allotment of securities ) rules ,2014 not apply.

6     Employee under ESOP scheme subject to prior special resolution and the conditions specified in Rule 12 of Companies ( share capital and debentures) rules,2014

This section does not apply where increase in subscribed capital is caused by exercise of option to convert debentures/loan into shares of the company provided terms of issue of debentures/loan have been approved by special resolution before issue of debentures/raising loans


  • Equity shares
  • Fully convertible debentures,
  • Partly convertible debentures
  • Any other security which would be convertible in to equity shares at a later date


1 Whether company has passed special resolution as required under section 62(1)(b) of the companies act,2013
2 If passed, check the copy of special resolution for approving the scheme of ESOP
3 Check whether special resolution has been filed with ROC in form no.MGT-14 as per companies ( Management and administration ) Rules,2014
4 Check that the explanatory statement to the notice of the meeting contains disclosures required to be made under sub rule (2) of rule 12 of Companies ( share capital and debentures) rules,2014
5 Check that directors report contains the disclosures required to be make in such report under sub rule (9) of the rule 12 of companies ( Share capital and debenture) Rules,2014
6 Verify the registrar of Employees stock options maintained in Form No.SH-6 of companies (share capital and Debentures) Rules,2014 and the registrar is duly authenticated by the company secretary of the company or by any other person authorized by the board for the purpose.


  • Minutes of Board meeting
  • Special resolution approving ESOP along with explanatory statement
  • Minutes of General meeting
  • Boards report
  • Register of Employees stock option plan
  • PAS-3, MGT-14

(Suyog S Kabra is  partner with White Collar Legal LLP and can be reached at

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October 2020