Note - Stepwise Procedure For Issuing Shares.

JAIPUR||BANGALORE||ALLAHABAD
STEPWISE PROCEDURE FOR ISSUING OF SHARES TO THE

SHAREHOLDER AND CONSULTANT OF PRIVATE COMPANIES IN INDIA
STAGE-I (PROCESS APPLICABLE FOR PREFERENTIAL ALLOCATION

OF SHARES TO EXISTING MEMBER AND ADVISORS)
Sr. Steps Involved Applicable Information/Document Timelines

No Provisions Required
1. Calling of Board Meeting Section 179 of Refer to Annexure A for As per Section
and passing necessary the Companies the information required 179(3) Board
resolutions. Act, to be filed under PAS-4. meeting can be
2013(Act), called by giving a
Passing Board Resolution for Section 42 of notice of at least 7
the following: the Act, and days. However, a
● The evaluation of the Rule 14 of the board meeting can
valuation report. Companies be called by giving
● The time, date, place and (Prospectus a shorter notice to
day of the Extraordinary and Allotment transact urgent
General Meeting (EGM) will of Securities) business, subject
be fixed. Rules, to the condition
● To identify the group of
2014(“Rules”) that at least two
persons to whom Private Section 62 of directors shall be
Placement shall be made; the Act, and present at the
● Approval of Private Rule 13 meeting.
placement offer cum companies
Application letter (Form PAS- (Share Capital
4) and authorizing a director And
to sign the declaration under Debentures)
PAS-4; Rules, 2014)
● Authorizing the Board of
Directors to open a separate
bank account for the proposed
issue (in case of issuance of
share for consideration other
than cash no separate bank
account is necessary).
2. Issuing notices to the Rule 14 of the Additionally the following For conducting an
shareholders for holding Companies disclosures are required to extraordinary
Extra-Ordinary General (Prospectus be in order to comply with general meeting
Meeting (“EGM”) and Allotment the requirement of Section of a company, a
of Securities) 42: minimum of 21
 The Company shall issue Rules, 2014, ● Particulars of offer; days notice is
notice to the shareholders Rule 13 of the ● Date of passing board required to be
for an EGM of a company Companies resolution; given to the
along with the explanatory (Share Capital ● Kinds of securities shareholders.
Email:jaipur@ailegalpartenrs.com||allahabad@ailegalpartners.com||bangalore@ailegalpartners.com
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
statement bearing the & Debentures) offered and its price; However, a
necessary information as Rules, 2014 ● The amount which the general meeting
required under Rule 13. and sections company intends to can be held on
62 and 42 of raise; shorter notice
 Explanatory statement the Act. ● Name and address of provided at least
annexed to the notice for the valuer who performed 95% of the
general meeting the basis or valuation; members
justification for the price ● Material terms of entitled to vote
(including premium, if any) raising such securities; in the meeting
at which the offer or ● Proposed time give consent to
invitation is being made schedule; the shorter
shall be disclosed ● Purpose or objects of notice.
offer;
● Contribution being
made by the promoters
or directors, if any.
3. Conducting EGM and EGM is to be

passing a Special Resolution conducted on the
Pass resolution for approval date as
for issuance of share on mentioned in the
preferential allotment basis notice/shorter
through Special Resolution. consent notice
issued.
4 Company to file e Rule 13 of the Information to be MGT-14 can be

Form MGT-14 with Companies filed under MGT - filled on the same
ROC (Share Capital 14: date or any time
● Form MGT-14 to be & Debentures) ● Name, CIN, registered after passing the
filed within 30 days. Rules, 2014. office and email id of of Board
● Copy of above the company; Resolution.
mentioned Board ● Date of the passing of
Resolution to be attached the resolution;
with MGT-14. ● Purpose and subject
● The Company shall issue ● Matter of resolution;
PAS-4 (Private placement ● A certified true copy of
offer) only after filing MGT- the Board resolution is
14 with ROC. to be attached.
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
5. Company to send Offer Section 42 of Refer to Annexure C for PAS-4 can be

Letters in form PAS-4 the Act and the information required sent on the next
● PAS-4 along with the Rule 14 of the to be filed under PAS-5. day of filing
application form is to be Companies Refer to Annexure B for MGT-14 by the
sent to identified persons (Prospectus the information required company.
within 30 days of recording and Allotment to be filed under MGT-
the names of the identified of Securities) 14.
persons under PAS-5 along Rules, 2014.
with an application form
serially numbered and
addressed specifically to the
person to whom the offer is
made.
● The value of such offer or
invitation per person shall
be with an investment size
of not less than twenty
thousand rupees of the
face value of the securities.
6. Company to file e-form PAS- Rule 13 of the Refer to Annexure D The Company
3 (Return of Allotment) Companies for the information shall file return of
The form shall be filed along (Prospectus required to be filed allotment within
with the Board resolution and Allotment under PAS-3. 30 days from the
approving the allotment of of Securities) date of allotment
securities and a complete list of Rules, 2014. Information of in Form PAS-3
all the allottees along with the allottees to be filed in with the Registrar
required information. the list of allottees of Companies
under PAS-3: (ROC).
● the full name, address,
Permanent Account
Number and E-mail ID
of such security holder;
● the class of security held;
● the date of allotment of
security;
● the number of securities
held, nominal value and
amount paid on such
securities.
7. The company shall hold a Rule 13 of the Board meeting can
Board meeting for the Companies be held at a
allotment of shares. (Share Capital shorter notice, any
● After the expiry of the offer & Debentures) time after the
period, pass Board Rules, 2014. expiry of the offer
Resolution for the allotment period.
of Shares to the entitled
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
subscribers.
● The allotment shall be made
within 12 months from the
date of passing of Special
Resolution and if the same
is not done within 12
months then another special
resolution shall be passed
for the company to
complete such allotment
thereafter.
8. Deciding Issue Price of Section 62 of
Shares the Act, and
● The price of the shares or Rule 13
other securities to be companies
issued on a preferential (Share Capital
basis, either for cash or for And
consideration other than Debentures)
cash, shall be determined Rules, 2014
on the basis of the
valuation report of a
registered valuer.
● The price of shares or
other securities to be
issued on a preferential
basis shall not be less than
the price determined on
the basis of the valuation
report of a registered
valuer.
9. Issue of Share Certificates Section 46 of Form No. SH.1 will Share certificate to
The Companies comprise of the following be issued within 2
Company to issue SH-1 to the Act, 2013. information: months of
person for evidencing that the  Name of issuing Company allotment.
name of the person written on  CIN no. (Corporate
the form is the owner of the Identification Number)
shares. of such Company
 Address of the company’s
registered office
 Name of owners of such
shares
 Folio number of member
 Number of shares which is
represented by such
share certificate
 An amount which is paid
on such shares
 Distinct number of the
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
share
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
STAGE-II(PROCESS APPLICABLE FOR PREFERENTIAL ALLOCATION

OF SHARES TO EXISTING MEMBER)

Preferential offer of shares made in the case for cash consideration
1. Company to open a Section 42 of Refer to Annexure D for the The bank account
separate Bank account and the Act and information required to be can be opened
receive application money Rule 14 of filed under PAS-3. anytime after
within the offer period as the passing the first
per the offer letter Companies board resolution.
● The subscription sum shall be (Prospectus
collected from all subscribers and
in a separate bank account Allotment of
opened for this reason. Securities)
● The payment to be made for Rules, 2014.
shares subscriptions by the
investors shall be made by
cheque or demand draft or
other banking channels but
not by cash.
 The company shall not use
subscription money unless
allotment is made, and
there turn of allotment is
filed in PAS-3 with the
Registrar of Companies.
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
STAGE-II(PROCESS APPLICABLE FOR PREFERENTIAL ALLOCATION

OF SHARES TO ADVISORS)
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163

Preferential offer of shares made in the case for other than cash consideration
1. Valuation of such Rule 13
consideration companies
 The valuation of such (Share
consideration shall be done Capital And
by a registered valuer who Debentures)
shall submit a valuation Rules, 2014
report to the company
giving justification for the
valuation.
2. Contract to be reduced in Rule 12 of

writing the
 The contract has to be Companies
attached with the valuation (Prospectus
report submitted by the and
registered valuer in respect Allotment of
of the valuation of the Securities)
consideration. Rules, 2014
 Where the contract is not

made in writing, the
company shall furnish
along with the Form PAS-3
complete particulars of the
contract stamped with the
same stamp duty.
3. Disclosure on explanatory Rule 13

statement companies
 The justification for the (Share
allotment proposed to be Capital And
made for such Debentures)
consideration together with Rules, 2014
the valuation report of the
registered valuer.
4. Treatment of the Rule 13
consideration other than companies
cash (Share
● when it takes the form of Capital And
a depreciable or Debentures)
amortizable asset, it shall Rules, 2014
be carried to the balance
sheet of the company in
accordance with the
accounting standards;
● when a prior condition is
not applicable, it shall be
expensed as provided in
theEmail:jaipur@ailegalpartenrs.com||allahabad@ailegalpartners.com||bangalore@ailegalpartners.com
accounting standards.
5. Details are to be Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
recorded in Refer to Annexure D for
PAS-3 the information required
● details of consideration to be filed under PAS-3.
are mandatory.
ANNEXURE-A
DETAILS TO BE FILED UNDER FORM PAS-4
1. GENERAL INFORMATION
a) Name, address, website and other contact details of the company indicating both
registered office and corporate office;
b) Date of incorporation of the company;
c) Business carried on by the company and its subsidiaries with the details of branches or
units, if any;
d) Brief particulars of the management of the company;
e) Names, addresses, DIN and occupations of the directors;
f) Management’s perception of risk factors;
g) Details of default, if any, including therein the amount involved, duration of default and
present status, in repayment of–
i. Statutory dues;
ii. Debentures and interest thereon;
iii. Deposits and interest thereon;
iv. Loan from any bank or financial institution and interest thereon.
h) Names, designation, address and phone number, email ID of the nodal/compliance
officer of the company, if any, for the private placement offer process;
2. PARTICULARS OF THE OFFER

a) Date of passing of the board resolution;
b) Date of passing of their solution in the general meeting, authorizing the offer of
securities;
c) Kinds of securities offered (i.e. whether share or debenture) and class of security;
d) Price at which the security is being offered including the premium, if any, along with
justification of the price;
e) name and address of the valuer who performed valuation of the security offered;
f) Amount which the company intends to raise by way of securities;
g) Terms of raising of securities: Duration, if applicable, Rate of dividend or rate of
interest, mode of payment and repayment;
h) Proposed time schedule for which the offer letter is valid;
i) Purposes and objects of the offer;
j) Contribution being made by the promoters or directors either as part of the offer or
separately in furtherance of such objects;
k) Principle terms of assets charged as security.
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS,

LITIGATION ETC.
a) Any financial or other material interest of the directors, promoters or key managerial
personnel in the offer and the effect of such interest in so far as it is different from the
interests of other persons;
b) Details of any litigation or legal action pending or taken by any Ministry or Department
of the Government or a statutory authority against any promoter of the offered company
during the last three years immediately preceding the year of the circulation of the offer
letter and any direction issued by such Ministry or Department or statutory authority
upon conclusion of such litigation or legal action shall be disclosed;
c) Remuneration of directors (during the current year and last three financial years);
d) Related party transactions entered during the last three financial years immediately
preceding the year of circulation of offer letter including with regard to loans made or,
guarantees given or securities provided;
e) Summary of reservations or qualifications or adverse remarks of auditors in the last five
financial years immediately preceding the year of circulation of the offer letter and of
their impact on the financial statements and financial position of the company and the
corrective steps taken and proposed to be taken by the company for each of the said
reservations or qualifications or adverse remark
f) Details of any inquiry, inspections or investigations initiated or conducted under the
Companies Act or any previous company law in the last three years immediately
preceding the year of circulation of offer letter in the case of the company and all of its
subsidiaries. Also, if there were any prosecutions filed (whether pending or not) fines
imposed, compounding of offences in the last three years immediately preceding the year
of the offer letter and if so, section-wise details thereof for the company and all of its
subsidiaries
g) Details of acts of material frauds committed against the company in the last three years,
if any, and if so, the action taken by the company
4. FINANCIAL POSITION OF THE COMPANY
a) The capital structure of the company in the depicting the following manner in a tabular form-
1. a. the authorized, issued, subscribed and paid-up capital (number of securities, description and
aggregate nominal value);
b.Size of the present offer;
c. paid-up capital
(A) after the offer
(B) after conversion of convertible instruments (if applicable)
d. Share premium account (before and after the offer)
2. The details of the existing share capital of the issuer company in a tabular form, indicating
therein with regard to each allotment, the date of allotment, the number of shares allotted, the face
value of the shares allotted, the price and the form of consideration.
Provided that the issuer company shall also disclose the number and price at which each
of the allotments were made in the last one year preceding the date of the offer letter
separately indicating the allotments made for considerations other than cash and the
details of the consideration in each case;
b) Profits of the company, before and after making provision for tax, for the three financial
years immediately preceding the date of circulation of offer letter;
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
c) Dividends declared by the company in respect of the said three financial years; interest
coverage ratio for last three years(Cash profit after tax plus interest paid/interest paid
d) A summary of the financial position of the company as in the three audited balance sheets
immediately preceding the date of circulation of offer letter;
e) Audited Cash Flow Statement for the three years immediately preceding the date of
circulation of offer letter;
f) Any change in accounting policies during the last three years and their effect on the profits
and the reserves of the company.
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
ANNEXURE-B
DETAILS TO BE FILED UNDER FORM MGT-14
INSTRUCTIONS TO FILL THE FORM

1. a) Corporate identity number (CIN) of company
2. a) Name of the company

b) Address of the registered office of the company
c)e-mail ID of the company
TYPES AND DETAILS OF RESOLUTION

3. REGISTRATION OF:
a) Resolution(s)
b)Agreement
c) Postal ballot resolution(s) under section 110
10 Service request number(SRN) of Form INC-28
4. DATE OF DISPATCH OF NOTICE FOR PASSING OF

a) Resolution(s)
b) Postal ballot resolution(s)
5. DATE OF PASSING OF
a) Resolution(s)
b) Postal ballot resolution(s)
6. Number of resolution(s) for which the form is being filed.
1. a) In case of alteration in the object clause, whether there is any change in the industrial activity of the
company
b) If yes, provide the main division of new industrial activity of the company Description of the main
division
8. In case of voluntary winding up under section 304, provide the following details
a) Mode of winding up
b) Date of commencement of winding up
c) Number of liquidators
9. Details of the agreement
10. Service request number(SRN) of Form No. INC-28
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
11. Total number of members as on the date of filing
ATTACHMENTS:
a) Copy(s) of resolution(s) along with copy of explanatory statement under section 102
b) Altered memorandum of association
c) Altered articles of association
d) Copy of agreement
e) Optional attachment(s) - if any
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
ANNEXURE-C
1. RECORD OF A PRIVATE PLACEMENT OFFER TO BE KEPT BY THE COMPANY

a) Name of the Company
b)Registered office of the Company
c) CIN
2. DETAILS OF PRIVATE PLACEMENT OFFER

a) Date when approval of the relevant authority (board or the shareholders, as the case may be) obtained
for the current Private Placement Offer Letter.
b) Amount of the offer.
c) Date of circulation of private placement offer letter:
d) Following details (in a tabulate statement) of the persons to whom private placement offer letter has
been circulated:-
(i) Name
(ii) Father’s name
(iii) Complete Address including Flat/House Number, Street, Locality, Pin Code
(iv) Phone number, if any
(v) email ID, if any
(vi) Initial of the Officer of the company designated to keep the Record
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
ANNEXURE-D
1. GENRAL INFORMATION
a) Corporate identity number (CIN) of company
b) Global location number (GLN)
c) Name of the company
d) Registered office’s address of the company
e) E-mail ID of the company
2. SECURITIES ALLOTED PAYABLE IN CASH

a) Number of allotments
b) Date of allotments
c) Date of passing shareholders’ resolution
d) SRN of Form Number MGT 14
3. SECURITIES ALLOTED FOR CONSIDERATION OTHER THAN CASH

a) Number of allotments
b) Date of allotments
c) Date of passing shareholders’ resolution
d) SRN of Form Number MGT 14
e) Details of consideration
4. CAPITAL STRUCTURE OF THE COMPANY AFTER TAKING IN TO CONSIDERATION

THE ABOVE ALLOTMENT(S) OF SHARES.
5. DEBT STRUCTURE OF THE COMPANY AFTER TAKING INTO CONSIDERATION THE

ABOVE ALLOTMENT(S) OF DEBENTURES/ OTHER SECURITY.
6. ATTACHMENTS:
a) List of allottees. Attach a separate list for each allotment. If not attached, then it shall be
submitted separately in a CD.
b) Copy of Board or Shareholders’ resolution.
c) Valuation Report from the valuer, if any;
d) Copy of contract where shares have been allotted for consideration other than cash or
attachment wherein the details of contract reduced in writing by the company, if any;
e) Copy of the special resolution authorizing the issue of bonus shares;
f) Complete record of private placement offers and acceptances in Form PAS-5.
g) Optional attachment(s), if any.
Hope the above note is helpful for the requisite purposes. We will be happy to afford any
further clarification or address any further queries that you may have.
Regards,
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163
Team AI Legal
Contact:+(91)-9545989648||+(91)-8810465822||+(91)-6393935163

Note - Stepwise Procedure For Issuing Shares.

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Note - Stepwise Procedure For Issuing Shares.

Uploaded by

Copyright:

Available Formats

JAIPUR||BANGALORE||ALLAHABAD

STEPWISE PROCEDURE FOR ISSUING OF SHARES TO THE

STAGE-I (PROCESS APPLICABLE FOR PREFERENTIAL ALLOCATION

Sr. Steps Involved Applicable Information/Document Timelines

3. Conducting EGM and EGM is to be

4 Company to file e Rule 13 of the Information to be MGT-14 can be

5. Company to send Offer Section 42 of Refer to Annexure C for PAS-4 can be

STAGE-II(PROCESS APPLICABLE FOR PREFERENTIAL ALLOCATION

Sr. Steps Involved Applicable Information/Document Timelines

STAGE-II(PROCESS APPLICABLE FOR PREFERENTIAL ALLOCATION

Sr. Steps Involved Applicable Information/Document Timelines

2. Contract to be reduced in Rule 12 of

 Where the contract is not

3. Disclosure on explanatory Rule 13

2. PARTICULARS OF THE OFFER

3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS,

INSTRUCTIONS TO FILL THE FORM

2. a) Name of the company

TYPES AND DETAILS OF RESOLUTION

4. DATE OF DISPATCH OF NOTICE FOR PASSING OF

6. Number of resolution(s) for which the form is being filed.

9. Details of the agreement

10. Service request number(SRN) of Form No. INC-28

11. Total number of members as on the date of filing

1. RECORD OF A PRIVATE PLACEMENT OFFER TO BE KEPT BY THE COMPANY

2. DETAILS OF PRIVATE PLACEMENT OFFER

2. SECURITIES ALLOTED PAYABLE IN CASH

3. SECURITIES ALLOTED FOR CONSIDERATION OTHER THAN CASH

4. CAPITAL STRUCTURE OF THE COMPANY AFTER TAKING IN TO CONSIDERATION

5. DEBT STRUCTURE OF THE COMPANY AFTER TAKING INTO CONSIDERATION THE

You might also like