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Allotment through circular resolution

Hetal (Cs) (25 Points)

09 January 2015

Can we allot equity shares through circular resoluiton under the Companies Act, 2013?

Thanks

Hetal Shah

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12 Replies

CS Mitesh Mehta (Company Secretary) (17139 Points)
Replied 15 January 2015

Yes

allotment of shares can be done vide circular resolution

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Hetal (Cs) (25 Points)
Replied 15 January 2015

Thanks for your reply.

Can ypu please tell me under which section of the Companies Act, 2013, allotment through circular resolution is permissible.

Regards

Hetal Shah

CS Mitesh Mehta (Company Secretary) (17139 Points)
Replied 15 January 2015

Section 179 (3) of the companies act 2013 prescribe the certain powers which can be exercised by means of resolution passed at the meeting of board. powers other than that can be exercised by means of passing circular resolution which include allotment of shares

2 Like

Manish Soni (CA , CS) (828 Points)
Replied 27 June 2015

But Section 179(3)(c) of CA2013 excludes issue of shares from circular resolution. How can you issue shares by passing resolution by way of circulation?

CS Mitesh Mehta (Company Secretary) (17139 Points)
Replied 28 August 2015

“Issue of securities” is “offer of securities” and not “allotment of securities.” 179(3)(c) prohibit issue of securities and not allotment of securities

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P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 29 August 2015

Yes, allotment of shares by circular resolution is permissible. However, resolution for issue of shares (i.e. when draft letter of offer/prospectus is approved and it is decided to offer the shares) has to be passed in a Board meeting only.

3 Like

Rohan Desai (Student) (27 Points)
Replied 03 May 2017

Hi All,

Thanks for the valuable information; I have just gone through with all the respective sections but I have not found anysection/ rules where it has mentioned that allotment of shares can be done by way of circular resolutions.

Can anyone please let me know the respective section / rule in which it has convered.

1 Like

FCS DHARMENDRA MISHRA (Legal & finance) (24 Points)
Replied 13 December 2017

Yes, you are correct

Law Aspire (CS) (755 Points)
Replied 25 January 2018

Originally posted by : Rohan Desai
	Hi All, Thanks for the valuable information; I have just gone through with all the respective sections but I have not found anysection/ rules where it has mentioned that allotment of shares can be done by way of circular resolutions. Can anyone please let me know the respective section / rule in which it has convered.

The section relating to Passing of Resolution by Circulation speaks about the matters which cannot be passed by way of circular resolution...
resolutions other than this can be passed through circulation

Varun Aggrawal (2 Points)
Replied 29 March 2018

Sir,

if we say that the issue of securities will be made before allotment, then issued capital will be raised before allotment.

Further, if we look the balance sheet then we found that there is four capital viz. Authorised capital, issued capital, subscribed capital and paid-up capital.

Issued and subscribed Capital will be raised at the time of allotment by full face value of the shares and paid-up capital will be raised by paid-up value per share.

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Rakesh Saini (14 Points)
Replied 11 June 2019

Dear All,

Can anyone explain complete process for allotment of shares by Circulation?

zia khan (MT) (2 Points)
Replied 04 January 2021

From my understanding, issue of the securities has the same meaning as that of allotment of securities. As the term "allotment" has not been defined in the companies Act.Hence, Allotment should be done in the Board Meeting only.