CHECKLIST FOR PREFERENTIAL ALLOTMENT OF SHARES UNDER SECTION 62 OF THE COMPANIES ACT 2013
Procedure
for Issue of shares to any persons other than existing equity shareholders U/S 62 (1) ( c ) ( taking into account
procedure u/s 42 also ) :
1) Prepare a list of
persons ( not exceeding 200 in a financial year for each kind of security ) to
whom offer may be made.
2) Ensure that no
allotment against any previous offer / invitation of any kind of security is
pending issue to be authorized by AOA.
3) Issue to be
authorized by AOA.
4) Pass special
resolution for such issue.
5) Explanatory
Statement to contain justification for price and premium, if any and also other
matters as prescribed by the rules.
6) Valuation report
of registered valuer / independent merchant banker / independent CA for price
calculation.
7) Only fully paid
securities can be issued.
8) Issue an offer
letter in form PAS – 4. ( If the shares are issed to existing members, Pass 4
need not sent )
9) Requirements of
Offer letter :
(a) To
be accompanied by serially numbered application form.
(b) Addressed specifically to the person to
whom offer is being made
(c) Sent to only such person in writing /
electronically
(d) Within 30 days of recording names in the
list
(e) No person other than the addressee allowed
to apply through application form
(f) Value of offer / invitation per person not
less than Rs.20,000/-of face value of the Security
(g) To also comply with requirement of
contents of notice about renunciation etc..
10) Maintain record
record of offer letters in PAS – 5. ( If the shares are issed to existing
members, Pass 5 is not applicable )
11) File offer letter
with ROC alnog with record of offer letters in PAS - 6 within 30 days of
circulation of offer letter. ( If the shares are issed to existing members,
Pass 6 is not applicable )
12) Amount against
offer to be received only by cheque / demand draft / other banking channels but
not by cash – only from the bank account of the subscriber.
13) Company to
maintain record of the bank account from which payments received.
14) In case of joint
holders, payment was received from first applicant only.
15) Allotment was
completed within 12months from the date of passing of special resolution. If
not, another special resolution was passed to complete allotment.
16) Where Convirtible
securities are offered, price of resultant shares shall be determined beforehand
on the basis valuation report.
17) Board resolution
to specifically contain authority for issuance of share certificates by any two
directors and out of which one should be director other than MD / WTD.
18) Share application
money was kept in separate bank account AND
was utilized only for
a)
adjustment against allotment ;
b)
Repayment .
19) Return of allotment
in form PAS -3 within 30 days.
20) Share Certificates
to be issued within 2 months of
allotment / 6 months of allotment of debentures.
21) Entry in Register
of Members.
22) In case of
consideration other than cash, accounting treatment as specified in Rules, was
complied.
very informative.. Keep posting
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ReplyDeletewhat is the solution when company wants to convert loans into equity shares pursuant to section 62(3) for preferential allotment but no resolution have been passed.
ReplyDeleteis it possible still to allot shares ??
what is the solution when company wants to convert loans into equity shares pursuant to section 62(3) for preferential allotment but no resolution have been passed.
ReplyDeleteis it possible still to allot shares ??
Hi
ReplyDeleteis there any Procedure for Issue of shares to existing equity shareholders on preferential basis (Not in their Right Ratio) u/S 62 (1)( c ), how it work give procedure and check list of the same
A private Limited company proposes to raise share capital of Rs. 5 Crores by issue of shares to its existing shareholders on preferential basis in terms of section 62(1)(c) of companies Act, 2013 in one or more tranches to three members namely Mr. A Rs. 2 Crores, Mr. B- Rs. 1 Crores, Mr. C. Rs. 2 Crores.
ReplyDeleteFor issue of shares to existing shareholders on preferential basis the company need to comply with the provisions of section 62(1) (c ) and comply with the conditions laid down in section 42 of the Act, including Rules 13 and Rules 14 of the Companies Act, 2013
Further provisio to Rule 13(1) in respect of issue of share on preferential basis as discussed above, provide that in case of any preferential offer made by the company to one or more existing members only, the provisions of sub-rule (1) and provisio to sub- rule (3) of rule 14 of (Companies (Prospectus and Allotment of Securities) Rules 2014 shall not apply. i.e.
Rules 14(1) :
(a) making of an offer or invitation to subscribe securities through issue of a private placement offer letter ion Form PAS-4.
(b) A private placement offer letter shall be accompanied by an application form serially numbered and addressed specifically to the person to whom the offer is made and shall be sent to him, either in writing or in electronic mode, within thirty days of recording the names of such persons in accordance with sub-section (7) of section 42:
Proviso sub- rule (3) of rule 14 of (Companies (Prospectus and Allotment of Securities) Rules 2014 :
Provided that a copy of such record along with the private placement offer letter in Form PAS-4 shall be filed with the Registrar with fee as provided in Companies (Registration Offices and Fees) Rules, 2014 and where the company is listed, with the Securities and Exchange Board within a period of thirty days of circulation of the private placement offer letter.
My questions are :
1. If Mr. A bring subscription money of Rs.2 Crores in 4 Installments say Rs. 50 Lacs in each Installment, Mr. B Brings subscription money in 3 installment and Mr. C Brings money in 2 Installments, then should company pass separate special resolution for each installments pf money bring by them or only special resolution for raising of Rs. 5 Crores will be sufficient ?
2. Should Company need to send one time simple offer Letter ( Not in Form PAS-4) to all those three shareholders or need to send separate offer Letter for each trenches as they bring money in 4 to 6 installments ?
3. Can Company allot the shares in one or more tranches say in 5 tranches to the above shareholders as they bring subscription money in 4- to 5 installment.
Sir under which section or rule it is stated that the face value per person should not be less than 20000
ReplyDeleteThanks for sharing very useful information...! Here you can easily find more information about Preferential Allotment of Shares. by Clicking on the given link.
ReplyDelete