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Friday, April 8, 2016

PROCEDURE FOR ALLOTMENT OF SHARES ON RIGHT ISSUE BASIS FOR PRIVATE LIMITED COMPANIES:



PROCEDURE FOR ALLOTMENT OF SHARES ON RIGHT BASIS FOR PRIVATE LIMITED COMPANIES:
1. Issue notice in writing to every Director at least seven days’ before convening the Board meeting.    (Sec 173(3))
2. Convene a Board Meeting.
3. Pass a Board resolution for approving “Letter of Offer”.  The offer letter shall include right of renunciation also.
4. Dispatch Letter of offer to all existing shareholders through registered post or speed post or through electronic mode at least three days before the opening of the issue.  In case of Private companies if ninety percent of the members of company give their consent in writing or in electronic mode, the time limit of three days before the opening of the issue shall not apply.
5. Receive acceptance, renunciations, rejection of rights from shareholders.
6. Issue notice in writing to every Director at least  7  days’ before convening  Board meeting. ( 173 (3))
7. Convene a Board Meeting
8. Pass Board resolution for approving allotment and issue of shares.
9. File with Registrar a return of allotment in E-Form PAS-3 within 30 days of allotment of shares.
1. File E-for MGT 14 within 30 days of Issue of securities. (Not applicable in case of private companies)
OTHER DETAILS:
1. There is no prescribed format for Letter of offer” to be issued, in case of right issue of securities.  Format of “Letter of offer” prescribed in Companies Act, 2013 in Pursuant to section 42 and rule 14(1) of Companies (Prospectus and Allotment of Securities) Rules, 2014 and not for section 62. Hence a letter of Offer may be issued  to the members of the company.
2. Letter of offer shall specify the number of shares offered and other information and limiting a time not being less than 15 days 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; In case of Private companies if ninety percent of the members of company give their consent in writing or in electronic mode, the time limit of fifteen days shall not apply.
3. Attach with E-Form PAS – 3 
(i) Board Resolution for allotment and issue of share.
(ii) Letter of offer.
(iii) List of Allottees.
4. List of Allottees attached with E-Form PAS-3 shall state the names, address, occupation, if any, of the shareholder and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the Form PAS-3 as being complete and correct as per the records of the company.
5. Valuation certificate of Right shares is necessary in case of Non Resident Shareholders.   It is not required for Indian shareholders.
6. After the Rights issue allotment is complete, issue the share certificate and make necessary entries in the Register of Members .