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Allotment of Shares or Increase in Paid up Share Capital

A company may finance itself by the way of internal and external finance. The internal finance is the way of getting funds by the way of issuing equity or preference shares, shares can be issued by a company in many ways such as issue of right shares, private placement, preferential allotment and bonus issue. There are a lot of formalities which are to be fulfilled by the company while issuing the shares. In the private companies the best practice is to issue shares to existing members for the non-interference of any outsider. Under this, right is given to the existing equity shareholders, in the proportion of their existing holding in the Company. The Shareholders of the Company can either accept the offer, renounce the offer in favor of any other person or reject the offer. The proportion of voting rights is not affected under the Right Issue, if accepted by all the shareholders.

Benefits of Issue of Right Shares

Ø  Greater control on the existing shareholders.
Ø  Increase in the value of shares and hence no loss of existing shareholders.
Ø  Increases company goodwill and brand perception.
Ø  There is no cost involved with the issuance of the shares such as floating cost.
Ø  Company has easy access to any capital required at any point of time.
Ø  The distribution technique involved with right shares is more scientific.

Procedure of issue of Right Shares

Ø  Articles should provide the provisions for offer the Shares to existing Holders.
Ø  Authorized Share Capital have to be sufficient to issue right shares, otherwise it is necessary to increase the Authorized Share Capital of the Company.
Ø  Issue of Notice for the Board Meeting along with the agenda regarding the issuance of shares on the right issue basis.
Ø  Convene Board Meeting for approval for issuance of shares on the right basis in the ratio as may be decided by the Board.
Ø  Issue of Offer Letter to the existing shareholders of the Company in the proportion of their existing shareholding.
Ø  Shareholders will give Acceptance Letter along with application money or Renunciation letters within the period of offer letter. If no response is received from the shareholders, then it is considered as the offer is declined by the shareholder.
Ø  Issue of Notice for the Board Meeting along with agenda regarding the allotment of shares.
Ø  Convene Board Meeting for approval of Board of Directors to allot shares to the person who have given the share application money.
Ø  Allotment of shares within 60 days from the date of receiving application money.

Documents required

Ø  Certificate of Incorporation.
Ø  MOA and AOA.
Ø  PAN card details of all proposed shareholders.
Ø  Address Proof such as Aadhar Card/ Driving Licence/ Voter card, of all proposed shareholders.
Ø  A Copy of the All Resolutions passed in the meeting of Boards.
Ø  A Copy of members Resolutions approving the Board of the company for such issue and allotment.

Inclusions in our services

Ø  Documentation of all requirements.
Ø  Filling of Resolutions to ROC.
Ø  Drafting of notices and resolutions.
Ø  Statutory Fees.
Ø  All other Consultancies regarding that.