Enquiry form
Whenever the Company needs fund it either utilizes its reserves or issues and allots further shares to either existing shareholders or to the public.
Primarily, issues can be classified as a Public, Rights or preferential issues (also known as private placements). While public and rights issues involve a detailed procedure, private placements or preferential issues are relatively simpler.
For a private company the section provides that a private company may issue securities :
A public company may issue any of the aforesaid securities by way of a public offer or rights/ bonus issue or private placement. Public Offer here includes Initial Public Offer (IPO) or Further Public Offer (FPO) of securities to the public by a company, or an offer for sale (OFS) of securities to the public by an existing shareholder, through issue of a prospectus.
Whenever the Company requires fund for its projects, it issues shares to the public for subscription. the Companies can acquire huge amount of investment by public issues of shares without incurring heavy expenses and fixed financial charges.
Few Companies might want to increase its share capital base so as to avoid unwanted hostile takeovers and also not to increase the share capital in the monetary terms than companies issue and allot Bonus shares. Bonus shares are issued to the existing shareholders only against the shares held by them in predetermined exchange ratio.
Rights Issue is a subscription rights to buy additional securities in a company made only to the company’s existing security holders. When the rights are for equity securities, such as shares, in a public company, it is a non-dilutive pro rata way to raise capital. With the issued rights, existing security-holders have the privilege to buy a specified number of new securities from the issuer at a specified price within a subscription period.
Shares can be issued in the following modes :
The Company has to firstly conduct the Board meeting to consider and discuss the authority given in the Articles of Association (AOA) of the Company to issue and allotment of shares or not. If no, then alter the AOA and then call the general meeting for further issue and allotment of shares.
The Company will conduct General Meeting of the members and pass thereat an ordinary resolution for further issue and allotment of shares in the capital of the company and consequential changes to the Memorandum of Association.
Once the Ordinary Resolution for further issue and allotment of shares in the company is passed, the company will file forms MGT-14 for filing of resolutions and Form PAS-3 along with necessary documents for further issue and allotment of shares in company with the Registrar of Companies (ROC) through MCA portal.
Upon receipt of the Forms of further issue and allotment of shares in the Company by the Registrar of Companies, and if it is satisfied with the forms filed and compliance made, he will process the forms and approve such issue and allotment of shares. Once the form is approved, the Master data of the Company will be updated on the MCA portal and also the approval email will be sent from the MCA office.
Share issue and allotment is the process by which companies pass on new shares to shareholders, who may themselves be new or existing shareholders. With a share allotment, the shares are created and issued by the company to the people who become the company's shareholders.
Allotment of Shares usually takes 2-3working days subject to the approval of the Central Govt. and the receipt of documents from the clients.
No. However, the Master Data of the Company on the MCA portal will be updated whenever the further Shares are issued and allotted the same can also be checked through this link at the field of Paid-up Share Capital of the Company;
Following are the ways for allotment of Shares :
• Issue and allotment of Bonus Shares (Known as capitalization of Profits)
• Issue and allotment of Right Shares only to the existing members of the Company
• Issue and allotment of Shares on a Private Placement basis or Preferential allotment
• Issue and allotment of Shares against any unsecured loans or borrowings or guarantees
• Issue and allotment of Shares pursuant to the exercise of option by the holder of debt security for conversion into Equity Shares
• Issue and allotment of Shares pursuant to the ESOP or ESOS
• Issue and allotment of Shares pursuant to any scheme of Merger or Amalgamation or takeover.