Shailvi Agarwal (COMPANY SECRETARY) (184 Points)
24 July 2017
Karan Batra
(Creator: TheProTalks)
(2325 Points)
Replied 25 July 2017
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 25 July 2017
Pl refer Sections 42 and 62 with Rules framed thereunder for procedure for increase in paid-up capital.
Ebin Varghese
(CS)
(186 Points)
Replied 25 July 2017
According to the Companies Act, 2013 a private company may issue shares by:
a. Private Placement
According to Section 42, private placement is when a company makes an offer or invitation to subscribe securities to a select group of individuals through the issue of a private placement offer letter.
b. Preferential Allotment
Preferential allotment is the allotment of shares to a select group of people on a preferential basis.
This does not include an offer of shares through a public issue, right issue, bonus issue, ESOP, etc.
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 issued 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 of offer letters in PAS – 5. ( If the shares are issued to existing members, Pass 5 is not applicable )
11) File offer letter with ROC along with record of offer letters in PAS - 6 within 30 days of circulation of offer letter. ( If the shares are issued 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 Convertible 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.
c. Way of Rights Issue
As per Section 62 of the Companies Act, 2013 right shares can be offered to:
d. Conversion of Loan or Debentures into Shares
By passing a special resolution, a company can convert its loans or debentures into shares. For shares to be convertible, a term has to be attached to the loan or debentures permitting the company to convert them into shares. (Section 62)
e. Bonus Issue
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