Right issue of shares Conditions, Procedures you should know
Right issue of shares Conditions, Procedures you should know
Right issue of shares meang allotment of shares to existing shareholders of the company. Under the right issue, company allots shares based on the ratio of share holding.shares are alloted on the ratio of shareholding.
Thus, right issue of share is a right provided to existing shareholders to subscriber for the shares of company.
While making offer for issue of shares company should provide shareholders with the right to renunce or reject the offer made to them.
1.Hold board meeting
- Decide cut off date
- Pass Board resolution authorizing right issue.
- Prepare draft offer letter
- Decide conditions, objectives, rights on offer letter
2. Issue offer letter:
- Offer letter will open after 3rd day of issue.
- Offer should open for 15-30 days. It can be open for less than 15 if at least 90% of members agree in written.
- Shareholders should be given a right to renunce or rejection.
3. Receive application money:
4. Hold Board meeting:
- Pass resolution to allot shares
- Prepare list of allottee
Note: Board meeting should hold within 60 days of receipt of money.
5. File PAS-3 with registrar
PAS-3 has to be filed within 30 days of allotment of shares
Attachments
a. List of allottee
b. Board resolution for allotment of share
6. Issue share certificate
Share Certificate has to be issued in form SH-1.
