Allotment of Share Right Issue

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RIGHTS ISSUE AS PER SECTION 62

Right issue of shares is governed under section 62(1)(a) of the Company Act,2013.It contains the provision pertaining to increase in subscribed Share capital of the company by further issue of shares to its existing equity shareholder in proportion to their shareholding pattern.

Procedure:

1. Convene a meeting of Board of directors

Issue Notice of Board Meeting to all the director of the company at least 7 days before the date of board Meeting.

However, if all the directors of the board agree, notice period can be shorter as well.

Attach Agenda of Board Meeting along with Notice.

Attach Notes of Agenda.

2. Finalisation of offer letter:

The Board shall in its meeting approve the offer letter specifying the number of shares that will be offered to the shareholders .

3. Renunciation of offer:

The shareholders to whom offer letter has been circulated can Accept or Reject the offer, wholly or partially or can renounce the offer in favour of some other person.

4. Time-period of offer letter:

To all the existing shareholders at least three days before the opening of the issue. Also, the offer should be kept open for a time which shall not be less than fifteen days or such lesser number of days as may be prescribed and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined.

5. Receipt of share application money from the shareholders:

The Company shall receive share application money from the shareholders under right issue of share.

6. Convene a meeting of Board of directors for allotment of shares:

A meeting of Board of Directors needs to be convened to approve the allotment of shares to the shareholders /persons from whom money has been received and to authorize any director for making the necessary filing with the Ministry.

7. Reporting to the Ministry:

The Company shall file form PAS-3 within 30 days of the allotment.

Attachment required for PAS-3

1. Board resolution and

2. List of allottees

NOTE- When the further issue of share results in increase in authorise share capital then following additional points are required to be considered: -

(i)Check whether the rights issue results in increase of authorized capital.

(ii) I If so, call a board Meeting to approve the notice of General Meeting to pass necessary Special Resolutions at the General Meeting to amend Memorandum/Articles of Association.

(iii)Check the copy of Form SH7, MGT14 filed with ROC.

Private Placement section-42:

1. Private Placement is made only to a selected group of persons who are identified by the Board of Directors of the Company.

2. The Private Placement offer shall be made to selected group of persons who have been identified by the Board whose number shall not exceed fifty or such higher number as may be prescribedi.e.,200 (Excluding qualified institutional buyers and employees of the company to whom ESOP has been offered).

3. Subscription money shall be paid through cheque or demand draft or other banking channels but not by cash.

4. Subscription money will be Kept in the separate bank account in a schedule bank and we cannot use the money for any other purpose.

5. The value of the Private Placement offers or invitation for each person should be of an investment size of 20,000 of the face value of the securities.

However, the limit of the maximum number of selected persons and value of private placement does not apply to: -

• NBFC

• Housing finance companies.

6. The Company shall make an allotment within 60 days from the date of receipt of application money. If the Company fails to allot the securities within 60 days, then it shall repay the application money to the subscribers within 15 days from the expiry of 60 days.

7. If the Company fails to repay the application money within the said period i.e., 15 days then it shall be liable to repay the money along with interest @12% per annum which shall be calculated from the expiry of 60 days.

Procedure

1. Conduct Board Meeting:

a. To approve the list of identified persons to whom the securities are to be allotted.

b. To approve the draft offer letter;

c. To approve the notice for conducting Extra Ordinary General Meeting.

2. Company will hold the Extra Ordinary General Meeting to pass Special Resolution for approving Private Placement and Letter of Offer.

3. Within 30 days from the date of EGM file form MGT-14, without filing MGT-14 Company cannot issue offer letter in PAS-4.

i. CirculatePAS-4 (Letter of offer) to the person to whom the offer is made. It shall be sent either in writing or in electronic mode.

ii. Company shall maintain a complete record of private placement offers in Form PAS-5. (Report of the Subscriber)

Attachment required for MGT-14

• Copy of special resolution

File PAS-3 within 30 days of allotment

Attachment Required:

• List of Allottees.

• Board Resolution for Allotment of Share.

• Valuation Report is mandatory

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