PREFERENCE SHARES

ISSUE OF PREFERENCE SHARES

MEANING

Preference shares mean those shares/securities of the company which entitles priority to their holders. The shares have preferential right to receive dividends, to receive capital back on a winding-up of the company. They come with no voting rights but they do provide preferential rights over ordinary shareholder

AS PER COMPANIES ACT, 2013

Section 43 of Companies Act, 2013 says that;

The share capital of a company limited by shares shall be of two kinds, namely:—

  1. equity share capital—
  1. with voting rights; or
  2. with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed; and
  1. preference share capital:

Provided that nothing contained in this Act shall affect the rights of the preference shareholders who are entitled to participate in the proceeds of winding up before the commencement of this Act.

EXPLANATION :

  1. “preference share capital”, with reference to any company limited by shares, means that part of the issued share capital of the company which carries or would carry a preferential right with respect to—
  1. payment of dividend, either as a fixed amount or an amount calculated at a fixed rate, which may either be free of or subject to income-tax; and
  2. repayment, in the case of a winding up or repayment of capital, of the amount of the share capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the payment of any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company;
  1. capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or both of the following rights, namely:—
  1. that in respect of dividends, in addition to the preferential rights to the amounts specified in sub-clause (a) of clause (ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to the preferential right aforesaid;
  2. that in respect of capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in sub-clause (b) of clause (ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to that preferential right in any surplus which may remain after the entire capital has been repaid.

WHY PREFERENCE SHARES

  1. Preferred Dividend: Preferred shares have a fixed dividend that must be paid-off before any dividend(s) can be paid to common shareholders. Whilst dividends are paid only if the company turns a profit; there are some preferred shares like cumulative shares that allow for the accumulation of unpaid dividends.
  1. Company Assets: Additionally, in the event of liquidation and bankruptcy, preference shareholders have a high claim on company assets as compared to common shareholders. This makes these shares particularly enticing towards the investors with low risk-tolerance.
  1. Re-purchase Shares: There are companies that can issue callable preferred shares, which afford them full right to re-purchase shares at their discretion. Simplifying in a way, that the company can purchase any outstanding shares at the market price, and can re-issue shares with a low dividend rate, thus, reducing the cost of capital.
  1. No Dilution of equity rights: Generally, preference shares do not carry voting rights. Therefore, Voting rights of existing shareholders are not diluted. Equity shareholders retain exclusive control over the company.
  1. Trading on Equity: The rate of dividend on preference shares is fixed. Therefore, with the rise in its earnings, the company can provide the benefits of trading on equity to the equity shareholders.
  1. No Charge on Assets: Preference shares do not create any mortgage or charge on the assets of the company. The company can keep its fixed assets free for raising loans in future.
  1. Flexibility: A company can issue redeemable preference shares for a fixed period. The capital can be repaid when it is no longer required in business. There is no danger of over-capitalisation and the capital structure remains elastic.
  1. Versatility: They are highly versatile and can be tailored to meet the issuer’s needs. Participating preference shares or convertible preference shares may be issued to attract bold and enterprising investors.

Preference shares can be made more popular by giving special rights and privileges such as voting rights, right of conversion into equity shares, right of shares in profits and redemption at a premium.

TYPES OF PREFERENCE SHARES

Preference shares are considered as quasi-debt instruments since they combine the features of equity as well as debt. On one side, they carry a preferential right over the ordinary shares to receive dividend at a fixed rate and on the other, they carry an equity risk of not being secured, except to the preferential right of repayment in case of winding-up of the company. Preference shares have proved beneficial for investors, since such quasi-debt instrument provides protection to their investment by possessing voting rights on matters affecting their interest, more so with the fixed rate of dividend. For the promoters, issue of preference shares to investors ensures access to capital without a need to provide any security, with a continued control.

  1. Cumulative Preference Shares

A preference share is called cumulative when the outstanding payment of a dividend is cumulative. Shares which have the right of dividend of a company even in those years in which it makes no profit are called cumulative preference share. The company must pay the unpaid dividends on preference shares before the payment of dividends to equity shareholders

  1. Non-Cumulative Preference Shares

A non-cumulative preference shareholder is only payable from each year’s net profit. A non-cumulative preference shareholder will not be paid from future profits. So, if a company undergoes a loss in that year, then the outstanding payment of dividend cannot be claimed in subsequent years like in the case of cumulative preference shares.

 

  1. Redeemable Preference Shares

According to Sec. 80 of the Companies Act, the preference shares, which can be redeemed after a specified period or at the discretion of the company, are called redeemable preference shares. A redeemable preference share is good for the company. These act as a hedge against future inflation and when the monetary rate declines in the country.

  1. Irredeemable Preference Shares

Non-redeemable preference share is permanent in nature and its shareholding is continuous till the company goes into liquidation. In this sense, the preference share resembles the equity share. So, in order to attract the investor, a clause is included in the agreement for redeeming the preference share after the expiry of a specified period. Irredeemable preference shares are a perpetual liability, which cannot be redeemed during the lifetime of the company.

  1. Participating Preference Shares

Participating preference share is where the issuing company is entitled to pay an increased dividend to the owners, in addition to preference dividend at a fixed rate. Also, the holders of participating preference shares may have the right to share the surplus asset of the company, when it’s winding up.

 

Agreement for participating preferred shareholders may or may not include these features:

  • If the company generates a certain amount of profit, the holder of participating preference shares will be paid a certain proportion of that profit, in addition to the normal fixed dividend.
  • If the company is winding up, the participating preference shareholders will be paid a certain proportion of the net sale price received.
  • Owners of participating preference shares may have the authority to approve certain actions, such as the sale of the business or larger assets associated with the business.
  • Owners of these shares may have voting rights similar to common stockholders.
  • These shares may be cumulative in nature so that unpaid dividends must be paid before any dividend can be issued to the owners of common stock.
  • An investor should buy participating preference shares when he/she believes that a company is likely to have a very strong earning.
  1. Non-Participating Preference Shares

The holders of non-participating preference shares are entitled only to a fixed rate of dividend and do not have any share in the surplus profit. The surplus profit of the company will thus go to the common shareholders. Preference shares are non-participating in nature unless and until expressly provided in the memorandum of the article.

  1. Convertible Preference Shares

These shares are those which are converted into equity shares at a specified rate on the expiry of a stated period. The shareholders have a right to convert their shares into equity shares within a specified period.

This kind of preference share is useful for the investors who want to receive a preferred share dividend and also participate in any kind of upward change in the price of the issuer’s common shares.

  1. Non-Convertible Preference Shares

The shares that cannot be converted to equity are referred to as non-convertible shares. These can also be redeemed.

  1. Preference Shares with a Callable Option

For the preference shareholders with a callable option, the issuing company has the option to buy back the share at a prefixed price on or before a pre-determined date. The company has a right to redeem preference share in between. Such preference shares will be redeemed at a premium if redeemed in between because the investor will have a loss in that case. The company will exercise such an option if the rate of preference dividend is falling in the market.

  1. Adjustable-Rate Preference Shares

For adjustable-rate preference shareholders, the rate of dividend is not fixed and depends on current interest rates in the market.

PREREQUISITES FOR THE ISSUE OF PREFERENCE SHARES

As per the Rule 9 of The Companies (Share Capital and Debentures) Rules, 2014, following are the few checkpoints to be considered before issuing the reference share. Once these below mentioned prerequisites are satisfied then the process for issue of preference shares can be initiated.

  1. The nominal capital of the company should be bifurcated into equity share capital and preference share capital.
  1. The Articles of Association is enshrined with provision relating to issuance of preference shares.
  1. At the time of issue of Preference shares, the company has no subsisting default in the redemption of preference shares issued.
  1. At the time of issue of Preference shares, the company has no subsisting default in payment of dividend due on any preference share.

POINTS TO PONDER WHILE ISSUING SHARES

 

The following are considerable points as per the Provisions of Section 55 Issue and Redemption of Preference Shares and Rule 9 of The Companies (Share Capital and Debentures) Rules, 2014 of the Companies Act, 2013 which act as the guidelines for issue of shares under various modes. 

  • No company can issue irredeemable preference shares.
  • It is has been mandate by the law that the shares should be redeemed within a period not exceeding twenty years from the date of their issue.
  • Provided that preference shares can be issued for period exceeding 20 years only by the company carrying infrastructure projects subject to Redemption of a Minimum 10% of such preference shares per year from the 21st year onward or earlier, on proportionate basis, at the option of preference share holder.
  • The shares can be issued only by passing the Special Resolution in the General Meeting of the Company.
  • The company is required to maintain a register of members under Section 88 must include the details regarding the holders of Preference shares.

Matters to be included in Special Resolution

  1. the priority with respect to payment of dividend or repayment of capital vis-a-vis equity shares;
  1. the participation in surplus fund;
  1. the participation in surplus assets and profits, on winding-up which may remain after the entire capital has been repaid;
  1. the payment of dividend on cumulative or non-cumulative basis.
  1. the conversion of preference shares into equity shares.
  1. the voting rights;
  1. the redemption of preference shares.

 

While issuing the Notice of General Meeting, the Explanatory Statement annexed to the notice must include the following matters as provided in Applicable Rules;

 

  1. the size of the issue and number of preference shares to be issued and nominal value of each share;
  1. the nature of such shares i.e. cumulative or non – cumulative, participating or non – participating , convertible or non – convertible
  1. the objectives of the issue;

 

  1. the manner of issue of shares;

 

  1. the price at which such shares are proposed to be issued;

 

  1. the basis on which the price has been arrived at;

 

  1. the terms of issue, including terms and rate of dividend on each share, etc.;
  2. the terms of redemption, including the tenure of redemption, redemption of shares at premium and if the preference shares are convertible, the terms of conversion;

 

  1. the manner and modes of redemption;

 

  1. the current shareholding pattern of the company;

 

  1. the expected dilution in equity share capital upon conversion of preference shares.

 

 

METHODS TO ISSUE PREFERENCE SHARE

 

  1. Right issue or Bonus Issue
  2. Private Placement

 

MODES OF ISSUING PREFERENCE SHARES

 

  1. Right issue of shares – Section- 62(1) (a)
  2. ESOP Under Section 62(1)(b) specifically provides for the issue to the employees
  3. Preferential allotment of shares – Section 62(1) (c) read with Section-42
  4. Private Placement of shares – Section-42

Procedure for the Issue of Preference Share as Right Issue under Section 62(1) (a)

The Right Issue of Shares is a formal invitation to the existing shareholders of the Company to buy additional new shares. The name Right Issue signifies that a right is given to the current shareholders to buy new shares at a discounted price as compared to the market price. To increase market exposure in the shareholders, Right Issue of Shares is done in the Company.

 

Procedure for the Right Issue of Shares

Issue allotment letter and share certificates within 2 months of allotment
Notice of Board Meeting for Further Issue of Shares
Convene Board Meeting
Letter of Offer specifying the number of shares to Existing Shareholders whose name is appeared in books as on Record Date
Subscription Period of Acceptance/Rejection limiting to not being less than 15 days and not more than 30 days from the date of the offer
Offer shall be deemed to include right of renunciation
Acceptance/Rejection of offer
Acceptance of Application Money
Board Meeting for allotment of Shares
Filing of E-Form PAS-3 to ROC

 

 

CHECKLIST FOR RIGHT ISSUE

 

  • Check weather articles authorise right issue:  If not, take steps to increase the authorised capital.
  • Letter of offer: specifying the number of shares to Existing Shareholders whose name is appeared in books as on Record Date
  • Board Meeting:- Hold Board Meeting and pass resolution for approval of letter of offer. Notice of BM to be sent atleast 7 days before date of BM.
  • Filing of MGT-14: File MGT-14 within 30 days from passing board resolution. (This provision is not applicable to private companies).
  • Dispatch letter of offer: Dispatch Letter of Offer through registered post, speed post or electronic mode to all existing shareholders. Letter of Offer to be sent atleast three days prior to opening of issue.
  • Time period of open offer:  Offer to be kept open for minimum 15 days upto 30 days.

 

Provided that in case of a private company, if ninety percent of members have given their consent in writing or in electronic mode, the period lesser than those specified shall apply.

 

  • Deemed refusal: No Intimation in 30 days would be deemed to be refusal of the offer and Shares shall be disposed of as per discretion of the Board of Directors of the Company as deem fit in the best interest of the Company.
  • Acceptance of application money
  • Board Meeting for Allotment of Shares: Hold another Board Meeting to approve issue of shares to shareholders who have opted for the Right Issue of shares. Notice of BM to be sent atleast 7 days before date of BM.
  • Allotment of shares: Allot shares in accordance with the list of allottees approved in the Board Meeting.
  • Filing of PAS- 3:- File PAS-3 within 30 days from date of allotment – return of allotment.
  • Issuance of share certificates:- Issue Share Certificate within 2 months from date of allotment.

 

CHECKLIST FOR RIGHT ISSUE BY LISTED COMPANIES – SEBI ICDR REGULATIONS, 2009

 

Applicability: These Regulations are applicable to a Rights Issue of a Listed Company, where the aggregate value of specified securities offered is fifty lakh rupees or more;

PROCEDURE:

  • Check weather articles authorise right issue:- If not, take steps to increase the authorised capital.

 

  • Appointment of merchant banker and other intermediaries :The issuer shall appoint one or more merchant bankers, at least one of whom shall be a lead merchant banker and shall also appoint other intermediaries only those who are registered with SEBI, in consultation with the lead merchant banker, to carry out the obligations relating to the issue.

 

  • In-Principle Approval of Stock Exchange: The Company must obtain in-principle approval for its Rights Issue from the Stock Exchanges where the company shares are listed.
  • Documents to be submitted before opening of the issue: The Lead merchant Banker shall submit the documents mentioned in regulation 8 of chapter II of along with draft offer document.

 

  • Filing of offer document: File letter of offer atleast 30 days prior to file the same with designated stock exchanges. If SEBI specifies any change in it then issuer shall carry out such changes.

The offer document filed with the board under this regulation shall also be furnished to the Board in a soft Copy in the manner specified in Schedule V

 

  • Format of Letter of offer: Specified in schedule VIII of part A or E specified in regulation 57(2)(b).  If a company complies conditions mentioned in clause 1 of part E then it has required to make Letter of offer according to Part E.

 

  • Pre-issue advertisement of right issue: atleast 3 days before opening of the issue.

 

  • Abridge Letter of offer to shareholders: atleast 3 days before opening of issue.

 

  • Minimum Subscription: Minimum subscription of issue size shall be 90 % of the issue size.

 

  • Record Date – 7 working days’ notice given for record date.

 

  • Issue Opening Date: As according to regulation 11 of chapter II.

The Rights Issue must be opened for subscription for a minimum period of 15 days and Maximum period of 30 days

 

  • Pricing: The issue price shall be decided before determining the record date which shall be determined in consultation with the designated stock exchange.

 

  • Over subscription: No part of over subscription of Rights Issue shall be retained by the Listed Company; the amount has to be refunded.

 

  • Withdrawal of the Rights Issue: No Rights Issue can be withdrawn by issuer after fixing the Record Date. In case if it has withdrawn after announcing record date, no further issue of capital is allowed for a period of 12 months from the record date.

LODR Requirement:

  • Intimation to stock exchange: atleast 2 days intimation to stock exchangeas per regulation 29 of SEBI, LODR regulations 2015.

CHECKLIST FOR BONUS ISSUE

 

The Following points shall be the focus of the Checklist for vouching the Capitalization of profit for issue of Bonus shares by the Company:

 

  • Check whether Authorized capital is sufficient for issue of Bonus Shares.
    • If Authorized capital is enough to issue bonus shares then it’s ok.
    • If authorized capital is not enough then first alter the Capital of Company by alteration in MOA.

 

  • Check Provision for Bonus issue in Article of Association of Company.
    • If AOA authorize to issue Bonus Share then it’s ok.
    • If AOA not authorize to issue Bonus Shares then alter the Article of Association.

 

  • Check availability of resources for issue of Bonus shares.

 

  • Check Quantum of Bonus shares.

 

  • Check no default in payment of interest or principle in respect of fixed deposit or debt securities issued by it.

 

  • Check no default in payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus.

 

  • Bonus issue must be authorised by the members of the company (by passing of Ordinary Resolution) on recommendation of Board.

 

  • Check is there any partly paid up share on the date of allotment.
    • If there is no Party paid up shares then it’s ok.
    • If there are partly paid up share, then first make them fully paid up shares.

 

Procedure For Issue of Bonus Shares

 

S. No.Name of ActivityDocuments ExecutionLimitation Period
1.Board Meeting for Issue Issue Notice for Calling Board Meeting7 days’ Notice

 

 

 Hold the Board Meeting

Ø  Check the Quorum

Ø  Place before the Board Resolution for issue of Bonus Shares

Ø  Pass Board Resolution for issue of shares.

Ø  Decide the Ratio of Shares offering to shareholders.

Ø  Fixing the date, time, and venue of the general meeting and

Ø  authorizing a director or any other person to send the notice for the same to the members.

  
  Atleast 21days Notice
  Notice shall specify the place, date, day and time of the meeting and contain a statement on the business to be transacted at the EGM.
  Authorize a director to do all the work relating to issue notice of right issue
2.       File MGT-14:File e-form- MGT-14 with ROC in which Resolution for issue of shares should be attachedWithin 30 days of Passing of Board Resolution for issue of shares.
3.       GENERAL MEETING:Check the Quorum.
  Pass Ordinary Resolution for bonus issue of shares
4.       Board meeting for AllotmentIssue Notice for Calling Board Meeting7 days’ Notice
  Hold the Board Meeting
  Check the Quorum
  Pass Board Resolution for allotment of shares.
5.       File PAS-3:File e-form PAS-3 with ROCWithin 30 days of passing of Board Resolution for allotment of shares.
  Attachments:

·         Ordinary Resolution for Bonus issue of shares.

·         Board Resolution for allotment of shares.

·         List of Allottees. (as per annexure –B of PAS-3)- Mentioning Name, Address, occupation if any and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the form PAS-3.

Issue allotment letter and share certificates within 2 months of allotment.

 

Procedure for the Issue of Preference Share as Preferential allotment of shares – Section 62(1)(c) read with Section-42

 

S No.ActivityActionDocuments executionPrescribed Time Limit
1Authority in AOACheck Articles of Association if authority not provide in AOAProceed for alteration of Articles of Association
Check Articles of Association if authority exist in AOAProceed for next step
2Get Valuation report from Registered Valuer
3Notice for conduct of Board Meeting for issue
of shares to pre- identified persons and calling GM
1.      Proposal of issue of shares on preferential basis

 

2.      Proposal for opening bank account in scheduled bank

 

3.      Draft resolution for issue of notice of EGM

 

4.      Notice for Board Meeting

 

5.      Agenda for Board Meeting

 

6.      Draft Notice for General Meeting along with explanatory

 

7.      Draft PAS-4 and PAS-5

 

8.      To take note Valuation report from Registered Valuer

Current Date
4Board Meeting1.      CTC copy of Board resolutions

 

2.      Minutes of Board Meeting

 

3.      Approved Notice of general Meeting along with Explanatory

 

4.      Approved PAS-4 and PAS-5

 

5.      Approved Valuation report of Registered Valuer

10 days
5File MGT-14 regarding 179(3)(c ) e-form MGT-14
attachment:-1.      Minutes of Board Meeting 

2.      Valuation report of registered valuer

Within 30 Days of BM
6Issue Notice of General Meeting to MembersSend Notice to Members along with PAS-4 and PAS-5Board Meeting date
7Extraordinary General Meeting1.      CTC of Special resolution

 

2.      Minutes of General Meeting

 

3.      Shorter Notice

25 days
8Open Separate Bank Account in Scheduled Bank and maintain the record of bank AccountsExecute necessary documents for opening of Bank accountForthwith
9Filing of SR in Form MGT-14 with the ROCeform MGT-14
attachment:-1.      CTC of Special Resolution 

2.      Notice of General Meeting alongwith explanatory

 

3.      Minutes of General Meeting

 

4.      Shorter Notice

Within 30 Days of EGM
10Issue PAS-4 serially numbered and address to the person to whom the offer is made in writing or electronic modeWithin 30 Days of recording the name of such person
11Subscription money to be received only through cheque or DD and other Banking channel not by cash
12Notice for conduct of Board Meeting for allotment of shares1.      Draft resolution for allotment of  shares

 

2.      Draft list of allottees

 

3.      Notice for Board Meeting

 

4.      Agenda for Board Meeting

Date of receipt of money
13Board Meeting for allotment of shares1.      CTC copy of Board resolution

 

2.      Minutes of Board Meeting

 

3.      Approved list of allottees

10 days from receipt of money
14Allotment of  SharesAllotment must be completed within 12 months
15Return of AllotmentDocuments to be attached in E-form PAS-3

1.      List of allottees

 

2.      Board resolution for allotment

 

3.      Minutes of General Meeting

 

4.      Notice of General Meeting along with explanatory

 

5.      Valuation report of Registered valuer

 

6.      PAS-4

 

7.       PAS-5

Within 15 days from the date of allotment
16Issue share certificatesShare Certificates in SH-1within 2 months from the date of allotment
17Payment of stamp duty on issue of share certificateswithin 30 days of issue of share certificates
18Enter in the register of membersEntry of Member detail in MGT-1within 7 days of approval of the allotment

 

PAS-3 : Return of Allotment to Registrar of Companies

PAS-4 : Letter of Offer

PAS-5 : Record of Placement

Considerable Points:-

  • Ensuring the number of persons to whom offer is made is not more than 200 aggregate in year.
  • The price of shares to be issued on preferential basis shall not be less than the price determined on the basis of valuation report of a registered valuer.
  • Monies received on application shall not be utilised for any purpose other than adjustment against allotment or repayment of monies where the company unable to allot securities.
  • No person other than the person so addressed in the private placement offer shall be allowed to apply through such application form.
  • Payment to be made for subscription shall be from Bank account of the person subscribing.

Procedure for the Issue of Preference Share as Private Placement of shares under Section-42

 

As per Section 42 of Companies Act, 2013 “private placement” means any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through private placement offer-cum-application, which satisfies the conditions specified in this section.

 

PROCEDURE:

  1. Check whether provision in Article of Association regarding Private Placement is provided.

 

  1. Call the Meeting of Board of Directors Meeting
  • Issue Notice of Board Meeting to all Directors (at least 7 days prior to the date of meeting).
  • Attach Agenda of Board Meeting along with Notice.

 

  1. Hold the Meeting of Board of Directors to:
  • Identify the person(s) to whom the Private Placement Offer/ Invitation has to be made.
  • Prepare Private Placement Offer Letter under PAS-4.
  • Pass Board Resolution for approval of Offer Letter.
  • Issue notice of General Meeting (at least 21 days before the meeting). The notice shall specify the place, date, day and time of the meeting and shall contain a statement of the business to be transacted at the meeting.

 

  1. Hold Extra Ordinary General Meeting
  • Check the quorum of the meeting.
  • Present offer letter in PAS-4 before the members for their approval.
  • Pass Special Resolution for Private Placement of shares.

 

  1. File MGT-14 with Registrar Of Companies.
  • Attachments to be made in MGT-14 are Notice of General Meeting with Explanatory Statement, Certified True Copy of SR passed and Minutes of the Meeting.

 

  1. Issue Offer Letter in PAS-4 within 30 days of General Meeting/ recording the name of such person(s). Circulation of Offer Letter shall be accompanied by an application form serially numbered and addressed specifically to the person to whom the offer is made. Offer Letter will be sent either in writing or in electronic mode.

 

  1. Open Separate Bank Account for;
  • Monies received on application under this Section shall be kept in a Separate Bank Account in a Scheduled Bank and shall not be utilized for any purpose other than – For adjustment against allotment of Securities; or For the repayment of monies where the Company is unable to allot Securities. ii. The Company shall keep the record of the Bank Account from which such payment for Subscription has been received.

 

  1. Prepare complete record of Private Placement in PAS-5.

 

  1. Make Allotment of shares within 60 days of receipt of Money from the persons to whom right was given.

 

  1. Call Meeting of Board of Directors after receiving of allotment money.
  • Issue Notice of Board Meeting to all Directors (at least 7 days prior to the date of meeting).
  • Attach Agenda of Board Meeting along with Notice.

 

  1. Hold the Meeting of Board of Directors;
  • Check the quorum of the Meeting.
  • Present list of Allotees before the meeting.
  • Pass Board Resolution for allotment of shares within 60 days of receiving of money.

 

  1. File e-Form PAS-3 with ROC for allotment of shares along with the following attachments:
  • List of Allotees
  • Board Resolution for allotment of shares.
  • Minutes of General Meeting
  • Notice of General Meeting along with explanatory statement
  • PAS-4
  • PAS-5

 

  1. Issue share certificates in Form SH-1 within 2 months from the date of allotment of shares and update minute book and register.

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