Share application form

Check for the following:

1)       a)       Whether within the authorized share capital of the company?

IF NOT, take steps to increase the authorized capital.

2)       Period for which the issue may remain OPEN:Rights offer shall be made by Notice specifying the number of shares offered and limiting a time not being less than 15 days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined {Section 81(1)(b)}.

3)       Conduct Board Meeting – Board Resolution approving the following:

• quantum of issue and the proportion of rights shares.

• alteration of share capital, if necessary.

• fixation of record date/book closure.

• appointment of merchant bankers and underwriters (if necessary).

• approval of the draft letter of offer or authorization of

  • managing director/company secretary to finalize the letter of offer in consultation with the managers to the issue.

  • the letter of offer should conform to the requirements of the Companies Act, 1956 as prescribed in Form No.2A under Section 56(3) of the Act.

  • full justification and parameters used for issue price should clearly mentioned in the letter of offer.

a)       Where offering shares to persons other than existing shareholders in terms of Section 81(1A):

• Pass a special resolution in the general meeting of the company.

• Where no special resolution could be passed, but the votes cast in favour exceeds the votes cast against:

• Get the approval of the Central Government on the application made by the Board of Directors.

File requisite forms with the ROC.

4)       If rights shares are to be offered to NRIs, obtain RBI approval.

5)       Despatch letters of offer to shareholders by registered post.

6)       The applications of shareholders who apply on plain paper and also in a standard form are liable to be rejected.

7)       Make arrangement with bankers for acceptance of share application forms.

8)       If the company does not receive 90% of the issue amount including the development from underwriters, the entire amount of subscriptttion is required to be refunded within 42 days from the date of closure of the issue.

If there is delay in the refund of subscriptttion by more than 8 days after the company becomes liable to pay subscriptttion amount, the company will pay interest for the delayed period as per section 73(2)(2A) of the companies act, 1956.

10)     Prepare a scheme of allotment.

11)     Convene a board meeting and make allotment of shares.

12)     File the return of allotment in Form No.2 with the registrar of companies within 30 days of allotment.

Some important points:

a) Where a Public company invites public subscriptttion, prospectus must have been filed with the ROC.

Where no prospectus inviting public subscriptttion has been issued, a statement in lieu of prospectus must have been filed at least 3 days before making the first allotment.

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