Article contains Procedure for issue of Equity Share by Private Company vide different ways which includes Right Issue under Section 62 of Companies Act, 2013, Bonus Issue under Section 63 of Companies Act, 2013 and Private Placement under Section 42 of Companies Act, 2013. Article has separately mentioned Procedure for each type of issue of Equity share by Private Company.
Page Contents
| Right Issue (Sec. 62) | Bonus Issue (Sec. 63) | Private Placement (sec. 42) |
| A Company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered to—
i. Existing shareholders. ii. Employees under a scheme of employees’ stock option, subject to special resolution passed by company. iii. Any persons, if it is authorised by a special resolution, whether or not those persons include the persons referred to in clause (a) or clause (b). Approve in Board Meeting File PAS-3 within 15 days from the date of allotment.
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A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of—
i. Free Reserves; ii. Securities Premium; iii. Capital Redemption Reserve: No company shall capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares, unless— (a) Authorised by Articles; (b) On the recommendation of the Board, been authorised in the General Meeting. (c) Not defaulted in payment of interest or principal of fixed deposits or debt securities; (d) Not defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus; (e) Partly paid-up shares are made fully paid-up; (f) The company which has once announced the decision of its Board recommending a bonus issue, shall not subsequently withdraw the same. The bonus shares shall not be issued in lieu of dividend. Approve in Board meeting File PAS-3 within 15 days from the date of allotment. |
Any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through private placement offer- cum-application, which satisfies the conditions specified in this section
a. To selected group of persons which has been identified by Board. b. On the recommendation of the Board, been authorised in the General Meeting c. File MGT-14 within 30 days from the date passing of special resolution with the Registrar. d. Application letter shall be in the form of an application in Form PAS-4. e. Allot securities within 60 days from the date of receipt of the application money. f. Company shall maintain a complete record of private placement offers in Form PAS-5. g. Return of allotment of securities shall be filed with the Registrar within 15 days of allotment in Form PAS-3. |
| Action | Time Period | Documents |
| 1. Send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. | Before 7 days from the date of Board Meeting.
(Unless Articles not provide anything) |
Notice of Board Meeting |
| 2. Pass the Resolution in Board Meeting for Right issue of Equity Share. |
– | Board Resolution. |
| 3. Prepare Offer of Letter and dispatched through registered post or speed post or through electronic mode to all the existing shareholders. | – | Offer Letter |
| 4. After receiving of share money again send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. | Before 7 days from the date of Board Meeting.
(Unless Articles not provide anything) |
Notice of Board Meeting |
| 5. Pass Board Resolution for allotment of shares. | Within 60 days from the date of receiving of money | Board Resolution |
| 6. File PAS-3 with Registrar of Company. | Within 15 days from the date of allotment of shares. | Form PAS-3 |
| 7. For issuing of share certificate once again send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. | Before 7 days from the date of Board Meeting.
(Unless Articles not provide anything) |
Notice of Board Meeting |
| 8. Pass the Board Resolution for issue of Share Certificate in Board Meeting. | Within 2 months from the date of allotment of shares. | Form SH-1 |
| S.N. | Action | Time Period | Documents |
| 1. | Send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. | Before 7 days from the date of Board Meeting.
(Unless Articles not provide |
Notice of Board Meeting |
| 2. | Pass the Resolution in Board Meeting for Bonus issue of Equity Share as well as fixing the date, time, and venue of the general meeting. | – | Board Resolution. |
| 3. | Send the Notice of General Meeting in writing to all the Shareholders, Directors & Auditor of the Company (Sec. 101). | Before 21 clear days from the date of General Meeting. | Notice of General Meeting. |
| 4. | Pass the Resolution in Meeting for Bonus Issue | Within 45 days from the date of day of the General Meeting being called. | Special Resolution |
| 5. | Filing of MGT-14 with ROC for passing of Special Resolution | Within 30 days from the date of General Meeting | Form MGT-14 |
| 6. | Prepare Offer of Letter and dispatched through registered post or speed post or through electronic mode to all the existing shareholders. | – | Offer Letter |
| 7. | After receiving of share money again send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. | Before 7 days from the date of Board Meeting.
(Unless Articles not provide |
Notice of Board Meeting |
| 8. | Pass Board Resolution for allotment of shares. | Within 60 days from the date of receiving of money | Board Resolution |
| 9. | File PAS-3 with Registrar of Company. | Within 15 days from the date of allotment of shares. | Form PAS-3 |
| 10. | For issuing of share certificate once again send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. | Before 7 days from the date of Board Meeting.
(Unless Articles not provide |
Notice of Board Meeting |
| 11. | Pass the Board Resolution for issue of Share Certificate in Board Meeting. | Within 2 months from the date of allotment of shares. | Form SH-1 |
| S.No. | Action | Time Period | Documents |
| 1. | Send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. | Before 7 days from the date of Board Meeting.
(Unless Articles not provide anything) |
Notice of Board Meeting |
| 2. | Pass the Resolution in Board Meeting for issue of Equity Share through Private Placement as well as fixing the date, time, and venue of the general meeting. | – | Board Resolution. |
| 3. | Send the Notice of General Meeting in writing to all the Shareholders, Directors & Auditor of the Company. | Before 21 clear days from the date of General Meeting. |
Notice of General Meeting. |
| 4. | Pass the Resolution in Meeting for issue of Equity Share through Private Placement and approval on List of Identified Person whom board want to issue share. | Within 45 days from the date of day of the General Meeting being called. | Special Resolution |
| 5. | Filing of MGT-14 with ROC for passing of Special Resolution | Within 30 days from the date of General Meeting | Form MGT-14 |
| 6. | Prepare Offer of Letter and dispatched through registered post or speed post or through electronic mode to all identified persons. | – | Offer Letter in Form PAS-4 |
| 7. | After receiving of share money again send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. | Before 7 days from the date of Board Meeting.
(Unless Articles not provide anything) |
Notice of Board Meeting |
| 8. | Pass Board Resolution for allotment of shares. | Within 60 days from the date of receiving of money | Board Resolution |
| 9. | File PAS-3 with Registrar of Company. | Within 15 days from the date of allotment of shares. | Form PAS-3 |
| 10. | For issuing of share certificate once again send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. | Before 7 days from the date of Board Meeting.
(Unless Articles not provide anything) |
Notice of Board Meeting |
| 11. | Pass the Board Resolution for issue of Share Certificate in Board Meeting. | Within 2 months from the date of allotment of shares. | SH-1 |
| 12. | Maintenance of list of identified persons in PAS-5. | – | PAS-5 |
Author Bio
In case of Issue of Equity Shares vide Rights Issue, PAS – 3 has to be filed with Registrar of Company within 30 days from the date of allotment.