Sec. 62(1)(a) of Companies Act 2013

Right issue means offering shares to existing members in proportion to their existing share holding. Thus it is an invitation to the existing shareholders to buy new shares in their proportion of existing shareholding.

Equal distribution of shares and proportion of voting right is not affecting by issue of fresh shares.

Procedure for For Further Issue of Shares on the Basis of Right Under Companies Act 2013

1. Call Board meeting and pass board resolution to discuss the matter of further issue of Shares on the basis of Right and approval thereof and approve letter of offer

2. Company will decide cut off date and Authorize a director of company to issue letter of offer

3. Letter of offer shall be dispatched to all the existing shareholders

4. And File MGT-14 along with board resolution passed for issuance of shares on right basis to existing shareholders of the company

5. Shareholders will file application form to company:-

(Form A– Application form by the offeror)

(Form B– Renunciation Form by the offeror)

(Form C-Application form for renounced share –by the person in whose Favour renunciation is made)

6. Offer will be open at least after 3 days of issue of offer letter

7. Offer will be open for minimum 15 days or maximum 30 days

8. Receive the application money from shareholders

9. Again call board meeting and Present list of allottees before the meeting

10. Pass board resolution to Allotment of Shares to the existing shareholders of the company.

11. File for PAS-3 (Attachments:- List of Allottees, Board resolution for allotment, proof of dispatch of offer letter and proof of money received from allottees- Bank Statement of company and allottees) for return of allotment and Form MGT-14  within 30 days of passing of board resolution for allotment of shares with roc

12. And issue share certificate

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One Comment

  1. Manjunath S says:

    MGT 14 not applicable for private companies and further for allotment also, only PAS 3 is enough and no need of one more MGT 14.

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April 2021