Meaning of Right Share of Issue: Right Issue’ means offering shares to existing members in proportion to their existing shareholding through letter of offer.
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 179-(3) | Issue the notice of Board Meeting At least 7 days before the meeting as per section 179-(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 is a Company Secretary from Delhi/NCR and can be contacted at cslilybali@yahoo.com, Contact Number : 9711772751)
Author Bio
1)Whether merchant banker role is required for a right issue of a listed company/
2)Whether shares can be issued at par or discount ?
3) is there any requirement of minimum subscription for the right issue? If not whether the share application money to be refunded?
A LISTED COM[ANY BUT SUSPENDED DUE TO BIFR ORDER NOW OUT OF BIFR, LISTING PROCESS IS IN PROGRESS BUT WANTS TO ISSUE RIGHT SHARES TO ITS PRESENT SHAREHOLDER CAN THE COMPANY ISSUE RIGHT SHARES BEFORE LISTING
Can rights issue of private limited company be tranferred to an outsider?
what is the date of issue here?
Doesn’t it require shareholders’ resolution since it is a futher issue of share capital?
why share stamp from SDM deptt within 30 days from date of issue
why SS 2 for public companies
Very well written. Just one question. Is there a provision of extending the right issue beyond 30 days? Or what happens if the full amount of subscription is not received? Can the issue me made again after some time?