What is Allotment of Shares Overview
However, Article of Association of the Company must not restrict the right to make such allotment and also the authorise capital of the company must have the limit to allot the required shares. The procedure for allotment of shares can be time-consuming with the need to meet compliance at every step. You can avail affordable plans offered by Provenience to complete the process with ease.
However, Article of Association of the Company must not restrict the right to make such allotment and also the authorise capital of the company must have the limit to allot the required shares. The procedure for allotment of shares can be time-consuming with the need to meet compliance at every step. You can avail affordable plans offered by Provenience to complete the process with ease.
Pursuant to the provisions of Section 42 & section 62 of the Companies Act, 2013, and the rules made thereunder, shares can be issued on the basis of Rights Issue, Private Placement & Preferential Allotment.
Under Right Issue,with the approval of the Board, shares are issued to the existing shareholders of the Company in the proportion of their current existing shareholding by issuing a Letter of Offer in this regard. The offer shall be open for a period not less than 15 days & not exceeding 30 days along with the right of renunciation. This offer period can be reduced in case of a Private Company with the consent of ninety percent, of the members of the Company. The offer letter shall be dispatched through registered post or speed post or through electronic mode or courier or any other mode having proof of delivery to all the existing shareholders at least three days before the opening of the issue.
Whereas, Preferential allotment refers to the allotment to any person being an existing shareholder or an outsider, either for cash or for a consideration other than cash. The price of such shares shall be determined by the Valuation Report. Rest of the practical procedure for the preferential allotment of shares is more or less similar to that of private placement.
Process for Allotment of Shares
01
Arranging the Documents
Arrange and provide the required documents as per the checklist shared.
02
Holding of BM & GM to approve the issue of shares
Calling and holding of BM and also GM In case of Private placement or Preferential allotment, to approve the issue of the shares
03
Filing of Form MGT-14
Form MGT-14 is required to be filed with the ROC for the registration of resolution passed by the shareholders for the approval of issue of shares.
04
Convening of BM to allot shares
Convening BM for allotment of the shares to proposed allottees & filing Form PAS 3 as return of allotment with ROC
Documents Required For Allotment of Shares
- Article of Association of the Company must not restrict the right to make such allotment
- Authorise capital of the Company must have the limit to allot the required shares
- Name of the Allottee
- Fathers Name of the Allottee
- Full address with PIN
- No of shares to be Allotted
- PAN card copy of the person
- Aadhar Card Copy of the person
Checklist /Minimum requirement for Allotment of Shares
- Article of Association of the Company must not restrict the right to make such allotment
- Authorise capital of the Company must have the limit to allot the required shares
- Name of the Allottee
- Fathers Name of the Allottee
- Full address with PIN
- No of shares to be Allotted
- PAN card copy of the person
- Aadhar Card Copy of the person
FAQs On Allotment of Shares
The authorised capital is the maximum share capital of the company which sets limit within which the shares are issued by the company unless an amendment is made to increase such authorised share capital. Paid-up capital is the shares issued by the company to its shareholders for raising capital but not exceeding the authorised capital.
Form PAS 3 is required to be filed with the list of allottees and board resolution for allotment.
The share certificate is required to be executed and circulated within 60 days of allotment of shares.
Issue of shares means an offer of shares to the investor which may or may not get accepted, and once the offer is accepted and consideration is received, the allotment of shares take place.
Valuation Report is to be obtained from the registered valuer in case of Private Placement and preferential Allotment and the same is not required in case of Right issue of the shares.
No, as far as law is concerned, it does not require the receipt of money within the offer period. Only acceptance to the offer of shares shall be received before the closure of offer period.
If there is no change in the financial position of the company & thereby on the value of the shares, the valuation report obtained previously may be taken into consideration.
