Issue of Share on Rights basis is covered under Section 62 of the Companies Act, 2013 and Companies (Prospectus and Allotment of Securities) Rules, 2014.
-The Right Issue of Shares is a formal invitation to the existing shareholders of the Company to buy additional new shares; such shares are issued in proportion to existing shareholding.
-One pre-emptive Right: One pre-emptive Right offer is to be made to the shareholders which is otherwise (should be either) to be acceptable or not at all. No further pre-emptive Right in respect of unacceptable shares.
Procedure of Right Issue:
1. Notice of calling Board Meeting
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- Issue Notice of calling Board, to al the Directors at least 7 days before the date of Board Meeting.
- Attach the Agenda of the Meeting along with the Notes with the Notice.
2. Holding of Board Meeting
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- Indentify the shareholders to whom shares are to be issued.
- Pass Board Resolution for the Approval of offer letter and authorization to Director to issue offer letter.
- Letter of offer to be dispatched through registered post or speed post or any electronic form to all the existing shareholders.
- Offer will be opened at least three days after the letter of offer and will be open for minimum of 15 DAYS OR maximum of 30 DAYS.
3. File MGT-14 with the ROC within 30 DAYS of passing of Board Resolution.
4. Call of Next Board Meeting after receiving Share Application money from the Shareholders.
5. Notice of calling Board Meeting
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- Issue of Notice of calling Board, at least 7 days before the Board Meeting.
- Attach the Agenda of the Meeting along with the Notes with the Notice.
6. Holding of Board Meeting
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- Present the list of Allottes before the Board.
- Pass Board Resolution for the Allotment of the shares (within 60 days of receiving of money).
7. File PAS-3 with ROC within 30 DAYS of Allotment.
8. Issue Share Certificate
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- Pass Resolution for issue of Share Certificate and also to authorize to two directors and authorize a person to sign Share Certificate.
- Issue of Share Certificate in Form SH-1 (As per Section 56 within 2 months from the date of Allotment of shares.
Note on Renunciation of shares by Shareholders
- Company will give offer of “Renunciation” to existing shareholders in the Letter of Offer. If Shareholder wants to renounce the Shares offered to him then shareholder will give a letter of renunciation in favor of other person (“herein referred as renouncee) to Company.
- Company will receive an acceptance letter and share application money from the renouncee.
- After closing of offer period company will hold a Board Meeting and allot shares to renouncee.
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