Skip to main content

Procedure of Issue of Shares in India

 In India, Companies Act,  2013 discusses the procedure of allotment of shares and it is read with Companies (Prospectus and Allotment of Securities) Rules, 2014.


Connect with an expert lawyer for your legal issue


Section 23 of the Companies Act, 2013 discusses the option to issue shares. In order to issue share the company needs to be a registered company. There are four ways in which shares can be issued:


Public issue (includes Initial Public Offering and Further Public Offering)


Private Placement


Rights issue


Bonus issue


Where a Public company can issue shares through Public Issue, Private Placement, Rights issue or Bonus issue, a Private Company may issue shares by way of Rights issue or Bonus issue and Private Placement.


In case of a Public issue the procedure is as follows:

 


Issuing the prospectus:

Section 26(1) deals with procedure of matter should be stated in the prospectus. A prospectus bears an open invitation to public to buy shares of the company. SEBI (Securities Exchange Board of India) is the regulator and thus a copy of the company’s prospectus needs to be submitted before the publication date.


The prospectus gives brief information about the company, like:


Consult: Top Corporate Lawyers in India

 


Name of the directors

Past Performance (including Reports of the company)


Terms of issue


Type of investment (for raising capital)


Apart from these details opening and closing dates of share issue, application form, application fees, allotment and call-on dates, minimum shares for application and bank details for deposit are provided in prospectus.


The Registrar after ensuring compliance will register the prospectus.

 


Application of shares:

After invitation, application can be submitted through prescribed form along with application fee before closing date mentioned in prospectus. Allotment of shares is done with the selected applicants and rest of applicants receive regret letters. Share certificates are issued after the allotment is done.


Connect with an expert lawyer for your legal issue

 


Call on shares:

Call on shares is a way to collect remaining shares after application and allotment as per the provisions of the prospectus. There’s first call, second call, etc. depending on the number of instalments.


In case of a Private Placement the procedure is as follows:


In case of Private Placement, a Private Placement Offer Letter is issued. Section 42 of Companies Act, 2013 discusses this provision and it should be read with Rules. Number of allotments of shares is limited and rules are laid down for the same. No company offering securities shall release any public advertisements or utilise any marketing agents, etc. to inform the public at large about the offer. Return of allotment has to be filed which should include a complete list of all security-holders.


Apart from this procedure which has been simplified, there are many technicalities attached with the same and therefore it should be taken care of with the help consultation from an experienced lawyer.

Labels:

Comments

Post a Comment

Popular posts from this blog

Concept of constitutionalism

  Concept of constitutionalism Who Started Constitutionalism? John Locke - The English Bill of Rights is a foundational constitutional document that helped inspire the American Bill of Rights. Political theorist  John Locke  played a huge role in cementing the philosophy of constitutionalism.  Constitution is a written law which describes the structure of Government, the rules according to which the Govt. must work and the boundaries within which the Govt. must work. Constitutionalism   can be defined as the doctrine that governs the legitimacy of government action, and it implies something far more important than the idea of legality that requires official conduct to be in accordance with pre-fixed legal rules. Constitution constitution is the document that contains the basic and fundamental law of the nation, setting out the organization of the government and the principles of the society. Basic norm (or law) of the state; System of integration and organi...
Post a Comment
Read more

business tips

1. Have a clear vision for your business and strive to achieve it. 2. Hire great people and give them ownership in the company. 3. Provide excellent customer service. 4. Establish yourself as an expert in your field. 5. Develop relationships with key suppliers, customers, and partners. 6. Keep track of your finances and invest in marketing and innovation. 7. Utilize digital platforms to reach a larger audience. 8. Take calculated risks and back yourself. 9. Continuously strive to improve your products and services. 10. Make customer satisfaction your priority.
Post a Comment
Read more

Effects of Non-Registration

 Effects of Non-Registration The Companies Act, 2013 evidently highlights that the main essential for any organization to turn into a company is to get itself registered. A company cannot come into existence until it gets registered. But no such obligation has been imposed for firms by the Indian Partnership Act, 1932. If a firm is not registered it does not cease to be called as a firm, it still exists in the eyes law. Certainly, such a big advantage is not absolute but is subjected to a lot of limitations which we will study further. Non-registration of a firm simply means that the business skips the formalities of incorporation and ceases to exist in the eyes of the law. section 58 of the Indian Partnership Act, 1932 deals with the procedure of incorporation. Likewise, the meaning of non-registration is the exact opposite of registration, meaning when a firm does not go through the procedure of incorporation or start carrying on activities without getting registered. Effects of ...
Post a Comment
Read more