Procedure for Right Issue of Shares with Relevant Formats

Background- As per Section 62(1) of the Companies act, 2013 if the Company decides to issue fresh shares, these should be offered to existing shareholders in proportion to existing persons who are holders of equity shares.

‘Right Issue’ means offering shares to existing members in proportion to their existing share holding. The object is, of course, to ensure equitable distribution of Shares and the proportion of voting rights is not affected by issue of Fresh shares.

PROCEDURE OF RIGHT ISSUE OF SHARES

• Company will decide the cutoff date.
• Company wills Prepare Draft Offer of Letter attached as Annexure-A
• Call & Hold the Board Meeting & Pass Board Resolution for approval of Right issue & offer letter .(Resolution is attached as Annexure-B)
• Authorize a director of company to issue Letter of Offer.
• Letter of offer shall be dispatched through registered post or speed post or through electronic mode to all the existing share holders.
• Offer will be open at least after 3 days of issue of letter of offer.
• Offer will be open for minimum 15 days or maximum for 30 days.
• Receive the Money from the Shareholders.
• Again call & Hold the Board Meeting
• Present List of Allottes before the Meeting.
• Pass Board Resolution for allotment of shares (within 60 days of receiving of money).( Resolution attach as Annexure-C)

File form with ROC:

• File PAS-3 with Registrar of Company.

ATTACHMENTS:

• List of Allottes.
• Board Resolution for allotment of Shares.

Issue Share Certificate:

• Pass Resolution for issue of Share Certificate in Board Meeting.
• Authorize to two directors and a authorize person to sign share certificate.
• Issue Share Certificate in Form- SH-1 (As per Section-56 with in 2 (two) months from the date of allotment of shares.

Annexure-A

NOTICE / LETTER OF OFFER

Date: 01.04.2016

Sub: Issue upto 17,63,71,500 (Seventeen Crore Sixty Three Lakhs Seventy One Thousand and Five Hundred) Equity Shares of Rs. 10 (Rupees Ten) each for cash, aggregating to Rs. 1,76,37,15,000 (Rupees One Hundred and Seventy Six Crores Thirty Seven Lacs Fifteen Thousand Only) on right issue basis to the existing shareholders of the Company

Dear Shareholder(s),

You are hereby informed that the Board of Directors has decided to increase the subscribed and paid up capital of the Company by issue and alllot up to 17,63,71,500 Equity Shares of Rs. 10/- each fully paid-up on right basis to existing equity shareholders of the Company as on ………………… on proportionate basis in the ratio of 2 Equity Shares for every 1 Equity Shares held by the existing shareholders on the date of this offer as per the detailed terms and conditions as mentioned, inter alia hereunder:

As a shareholder on the aforementioned date, we are pleased to inform you that you are entitled to for the “rights shares offer” in reference to details as mentioned in the enclosed application form.

PRINCIPAL TERMS AND CONDITIONS

1. Object of Offer: Your Company is generating internal funds by way of increase in paid up capital of the Company for the development of solar power project in the state of Andhra Pradesh.

2. Mode of Allotment: Shares will be issued in physical form.

3. Face Value: The new equity share shall be of a face value of Rs. 10/- each.

4. Number of Shares: The number of shares under the offer is 17,63,71,500 Equity shares

5. Offer Price: The offer price is Rs. 10/- per share

6. Present Shareholding Pattern and number of shares offered to shareholders under this offer

7. Terms of payment: The full amount of Rs. 10/- per share shall be payable on application.

8. Mode of Payment: Normal Banking Channel

9. The new shares shall rank pari-passu with the existing equity shares of the Company.

10. Acceptance of Offer: You may accept and apply for the equity shares hereby offered to you wholly or in part by filling up the enclosed Application Form and submitting the same to the Company at its registered office address from the opening of the offer on 04.04.2016 but on or before the close of offer on 18.04.2016.

However, if the Consent of not less than 90% of members is received for opening of offer for a period lesser than the above mentioned period, the offer may be open for that shorter period also and will be closed accordingly.

The application must be only on the prescribed form enclosed and marked as ‘Form – A’. As stated above, you may apply for additional shares if in first instance you have subscribed to all the shares offered to you.

The Board may extend the last date for receipt of the application form by such period as it may deem fit or to close the offer upon full subscription but not exceeding a maximum period of thirty days from the date of opening of this offer.

11. Disposal of unsubscribed shares: If the duly filled Application form along-with the application money is not received by the Company or its bankers before the close of banking hours on or before 18.04.2016 or extended date, if any, then this offer shall be deemed to have been declined and the Board may dispose of the unsubscribed shares in such manner as it thinks fit.

12. Renunciation: This offer carries the right of renunciation. The rights offer of shares can be renounced, wholly or in part, in favour of any other person(s). This right of renunciation is subject to the express condition that the Board shall be entitled in its absolute discretion to reject the request for allotment from the renounce(s) in case the renouncee is not an existing shareholder, without assigning any reason thereof. The shareholders can renounce their rights entitlement of shares by signing the enclosed ‘Form – B’ – Form of Renunciation. Renouncee shall have the right to apply for additional shares.

13. Basis of Allotment: The basis of allotment shall be finalised by the Board in the following order of priority:

i. Full allotment to the shareholder applied for rights entitlement either in full or in part.

ii. Shares applied based on the renunciation in favour of shareholder by other shareholder

iii. Allotment to the shareholders who have applied for additional shares, provided that they have applied for all the shares offered to them and there are surplus shares.

iii. Allotment of equity shares to any other person as the Board may in their absolute discretion, deem fit, provided there is surplus available after allotment under i. and ii. above

14. Applicable Law: Section 62(1)(a) of the Companies Act, 2013 and rules made there under

15. Allotment and refund orders: The Company will allot the Equity Shares within 60 days from the date of receipt of application money and will issue Share Certificates within 2 months of allotment of Equity Shares.

Company will issue letters of regret along with refund orders, if any, within a period of 15 days from the date of completion of 60 days of receipt of share application money.

DECLARATION

NO STATEMENT MADE IN THIS LETTER OF OFFER CONTRAVENES ANY OF THE PROVISIONS OF THE INDIAN COMPANIES ACT, 2013 AND THE RULES MADE THEREUNDER. ALL LEGAL REQUIREMENT CONNECTED WITH THE SAID ISSUE HAVE BEEN DULY COMPLIED WITH.

Yours,

By order of the Board

For ………………….. PRIVATE LIMITED

………………

Director

DIN: ………………..

Address: ……………….,

………………….

Place: New Delhi                                                                                                 

Date: 01.04.2016

Enclosure:

1. Application Form

2. Renunciation Form

3. Application Form for Renounced Shares

FORM ‘A’ – APPLICATION FORM

Rights Issue of 17,63,71,500 Equity Shares of Rs. 10 each to the existing shareholders whose name appeared in the Register of Members on 01.04.2016

Dated: ________

The Board of Directors

………………….. Private Limited

Plot No. ……….. ………

Phase- ……………….

Dear Sir,

I/We, __________________________________________ apply for allotment of Equity shares indicated below in response to your letter of Rights Offer dated 01.04.2016 and subject to the Memorandum and Articles of Association of the Company. I/ We hereby agree to accept the shares as may be allotted to me on the terms laid down in the letter of offer.

Signature of Shareholder

FORM ‘B’ – FORM OF RENUNCIATION

Rights Issue of 17,63,71,500 Equity Shares of Rs. 10 each to the existing shareholders whose name appeared in the Register of Members on 01.04.2016

I/We,________________________ hereby renounce my/our right to acquire the equity shares offered to the company vide Letter of offer dated 01.04.2016, in favor of __________________. Further, I have not made any application to the company for allotment of these equity shares in the name of company.

Signature of Shareholder

FORM ‘C’ – APPLICATION FORM FOR RENOUNCED SHARES

Rights Issue of 17,63,71,500 Equity Shares of Rs. 10 each to the existing shareholders whose name appeared in the Register of Members on 01.04.2016

As per the Form of Renunciation signed by ___________________, we apply for allotment of _________equity shares as renounced in our favour by making the payment of INR___________ being the value of renounced equity shares

Signature of Shareholder

ANNEXURE-B

PROPOSAL FOR RIGHT ISSUE:

The Board was informed that for the development of 350MW solar power project in the state of Andhra Pradesh, the Company requires internal funds by way of increase in paid up capital of the Company. Therefore, the Company may request the existing shareholders of the Company to infuse further funds in the Company by subscribing to the equity share capital. The Board was further apprised that for the same, a right issue can be offered to the existing shareholders in the ratio of their present holding with the right to renounce. The Board discussed the matter and passed the following resolution:

 “RESOLVED THAT pursuant to the provisions of section 62 and any other applicable provisions, if any, of the Companies Act, 2013 and rules made thereunder and subject to Article of Association of the Company, the Foreign Exchange Management Act, 1999, the notification and circulars as issued by Reserve Bank of India and other applicable laws and guidelines, the consent of the Board of Directors of the company be and is hereby accorded to offer, issue and allot 17,63,71,500 Equity Shares of Rs. 10/- each on right basis in the proportion of 2 Equity Shares for every 1 Equity Shares held by the existing shareholders on the date of the offer, i.e., 01.04.2016 to all the existing shareholders of the Company as on date on the, inter alia, following terms and conditions:

a. That the full amount of Rs. 10/- (Rupees Ten only) per equity share shall be payable along with the application for subscription of such shares in the prescribed application form.

b. The shares to be allotted as per the aforesaid offer will rank pari-passu with the existing equity shares of the Company.

c. The offer aforesaid shall include a right exercisable by the persons to renounce the shares now being offered in favour of any other person(s) provided such renunciation is made before the time not being less than fifteen days from the date of offer. However, the offer may be open for a period lesser than 15 days upon receiving the consent from not less than 90% members of the Company.

d. The applicant may apply for more number of equity shares against the shares entitled   for as per the offer and the shares will be allotted on proportionate basis.

e. The offer shall be open for a period of fifteen days from the date of offer within which the offer is not accepted, shall be deemed to be declined. However, the offer may be open for a period lesser than 15 days upon receiving the consent from not less than 90% members of the Company.

RESOLVED FURTHER THAT the draft offer letter along with application form as placed before the Board and duly initialed by the Chairman of the meeting for the purpose of identification with respect to aforesaid rights issue of equity shares be and is hereby approved and Mr. …………. (DIN…………….) and Mr. …………… (DIN: …………….), Directors of the Company be and are hereby severally authorized to sign the offer documents of rights issue and take all the necessary steps in this regard.”

Certified True Copy

For …………… PRIVATE LIMITED

……..

Director

DIN:………..

Address: ……………

ANNEXURE-C

EXTRACT OF RESOLUTION PASSED AT THE MEETING OF BOARD OF DIRECTORS OF …………………………………….. PRIVATE LIMITED IN THEIR BOARD MEETING HELD ON FRIDAY, 22^ND APRIL, 2016 AT B-38/C/1, Sector 57, NOIDA – 201301

ALLOTMENT OF 16,62,56,250 EQUITY SHARES:

“RESOLVED THAT pursuant to the provisions of Section 62 and other applicable provisions, if any, of the Companies Act, 2013 and rules made thereunder including any statutory modification or re-enactment thereof, Articles of Association, the Foreign Exchange Management Act, 1999, and Regulations made thereunder, the notification and circulars as issued by Reserve Bank of India and other applicable laws and guidelines, if any, the consent of the board be and is hereby accorded for allotment of 16,62,56,250  Equity shares of Rs. 10/- each fully paid up aggregating to Rs. 1,66,25,62,500 (Rupees One Hundred Sixty Six Crores Twenty Five Lacs Sixty Two Thousand and Five Hundred Only) to the existing shareholder on right basis in the ratio of its shareholding in the Company as per the following details:

RESOLVED FURTHER THAT above said equity shares will rank pari-passu with the existing equity shares of the Company.

RESOLVED FURTHER THAT Mr. ……………….) and Mr. ………. Kohli(DIN: ……………), Directors of the Company be and are hereby severally authorized to;

• execute, sign and file with various authorities / departments, all applications, forms, agreements, deeds, certificates, documents, papers etc.;
• to make the necessary entries in the Register of Members u/s 88 of the Companies Act, 2013,
• do all such other acts, deeds and things as may be required or deemed necessary to give effect to the above resolution and to settle any question or difficulties that may arise in this regard.

RESOLVED FURTHER THAT the excess share application money received, if any, be refunded to the remitter shareholder not later than 180 days of receipt of money.

RESOLVED FURTHER THAT pursuant to Section 46, 56 of the Companies Act, 2013, and rule 5(2) of the Companies (Share Capital and Debentures) Rules 2014, and other applicable provisions, if any of the Companies Act, 2013, a Share Certificate be issued under the signature of Mr. ……….. (DIN:………….)and Mr. Manoj Kumar Kohli(DIN: ………………) and Mr. PL Chockalingam, authorised signatory of the Company and common seal be affixed in presence of them.

// CERTIFIED TRUE COPY//

Certified True Copy

For ……………… Private Limited

…………..

Director

DIN:……………

Address: …………

Author of this article is CS Yogesh Gupta & can be reached at [email protected] and 7742681270