Issue of Fresh Shares
Sometimes companies wish to increase their capital base by issuing new share capital. However, Companies cannot issue share capital beyond its authorized capital. Issue of fresh shares requires filing of forms with the registrar of companies and some other compliances before and after issue of share capital.
Issue of fresh shares requires calling of board meeting, valuation of issue price shares from registered valuer, filing of application with Ministry of corporate affairs. Filing of necessary forms and supporting documents including valuation of issue price is an important aspect and requires expert support and professional guidance.
We at Tax Muneem take care of all your needs by providing personal supervision to compile forms and supporting documents.
Drafting of Board minutes and notice.
Preparation of application for MCA
Filing fee of application with Ministry of corporate affairs
Additional Fees Payable
Any compliance related to increase in authorized capital
Penalty payable for non-compliance
Copy of Board Resolution
Details of Allottee
Optional attachments as may be deemed fit
Any other information
2-3 week time for filing and processing of form
The process of providing the new shares to either the existing shareholders or to some other classes of persons is known as issue of shares.
The main reasons for the issue of shares can be as follows: –
- For growing firm.
- Issuing shares might also fund a particular new development or project, which will often require significant initial capital
- Shares may be issued to repay some or all the company’s borrowing.
- A share issue could be used to fund the purchase of another company. Under this situation, the fund are raised through the issue of new shares and the proceeds are then used to buy the other business.
- The list is not exhaustive, there can be any reason to issue shares.
A private company either can issue shares to its existing shareholders by way of rights issue or by way of giving them bonus shares or it can issue securities through private placements.
Right Issue – The process of issuing the shares to the existing shareholders in proportion to their original shareholding is known as Right Issue. The Right shares can be issued:
- to its existing shareholders.
- to employees under a ESOP plans.
- to any persons as may be authorised by a Special Resolution.
The procedure to issue right shares shall be as follows: –
- Convene a Board Meeting.
- Letter of Offer shall be approved through Board Resolution.
- A letter of offer shall be dispatched to all the existing shareholders through registered post, speed post or through electronic means atleast 3 days before the opening of the issue.
- Receive Application Money.
- The Second Board meeting shall be called by issuing the notice to every director.
- Board Resolution shall be passed for issuing the Allotment of Shares.
- Share Certificates shall be given within 2 months from the date of allotment.
Process by which the stock, bonds or securities are given directly to the private investor rather than public offering.
- Check Provision in Article regarding Private Placement
- Call Board Meeting, to Prepare Offer Letter, Make Proposal for Private Placement, prepared list of persons to whom the options will be given.
- Call Extra Ordinary General Meeting to pass the Special Resolution.
- File MGT14 with the Registrar
- Issue offer letter in PAS-4 within 30 days of record of name of persons.
- PAS-5 shall be used to make the record for private placement.
- Allotment of shares within 60 days of receipt of Money from the persons to whom right was given shall be made.
- Called Board Meeting for allotment of shares.
- File PAS-3 with Roc within 30 days if Allotment.