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STEP-BY-STEP PROCESS FOR THE RIGHT ISSUE || DRAFT DOWNLAORD

BOARD MEETING

Begin by convening a board meeting and passing the subsequent resolutions:

  • Ratify the proposed ratio for the right issue

  • Approve the official offer letter

  • Designate a director to dispatch the offer letters and manage necessary formalities.


GENERAL MEETING

it's not obligatory to hold an Extraordinary General Meeting (EGM) for a share issue via a rights offering. However, in situations involving foreign investors, an EGM might be required.

  • The rationale behind this is simple: when a company issues offer letters to all existing shareholders, and a minimum of 90% of the offer must be subscribed, it implies that a significant majority of shareholders already support the right issue. This practical aspect eliminates the necessity for an EGM, as the required consent is inherently secured. This streamlined process underscores the efficiency of rights offerings in engaging shareholders and facilitating capital infusion


DISPATCH OF NOTICE AND OFFER PERIOD

  • Dispatch the offer letters to shareholders' registered addresses via speed post, courier, or registered post. Maintain proof of delivery for three years.

  • The offer period should span between 15 to 30 days. For private companies, securing consent from 90% of members is obligatory for a shorter offer period.

  • There is no need to open an Escrow Account to accept the acceptance of offer,

VALUATION REPORT

  • Although not mandatory, a valuation report might be necessary, especially in cases involving foreign investors.


ALLOTMENT OF SHARE

  • Following the offer period, hold another board meeting to pass resolutions related to share allotment.

  • Submit the PAS-3 (Return on Allotment) filing within 30 days of share allotment.

  • The allotment shall be made within 60 days from the date of receiving of application money.


REFUND OF APPLICATION MONEY

  • If a company fails to assign shares within 60 days of receiving the money for applications, there are rules to follow. The company must refund the entire amount within 15 days after these 60 days, and during this time, no interest is added.

  • However, if the company takes longer than these 60 days plus the additional 15 days, it must then pay interest at a rate of 12% per year. This interest starts counting from the end of the initial 60-day period.

  • The company is not allowed to use the fund until allotment is made, the amount shall be kept in the bank account of the company.


ISSUE OF SHARE CERTIFICATE

  • Procure a stamp paper to cover the stamp duty for issuing share certificates (0.005% of Subscribed capital).

  • Ensure issuance of share certificates within 60 days from the allotment date.

USE OF FUND

  • The company shall use the funds received through the right issue only after approval of the return of Allotment (PAS 3).


QUESTION AND ANSWER

WHAT IS THE RIGHT ISSUE OF SHARES?

Ans. A rights issue, also referred to as a rights offering or shares offering, is a method by which a company raises additional capital. This is achieved by offering existing shareholders the opportunity to purchase extra shares of the company's stock at a discounted price, usually relative to the current market price. This approach enables shareholders to maintain their proportional ownership in the company.

CAN A COMPANY ISSUE PREFERENCE SHARES THROUGH A RIGHTS ISSUE?

IS IT MANDATORY TO PROVIDE A 15-DAY OFFER LETTER?

CAN A PRIVATE LIMITED COMPANY OFFER A RIGHTS ISSUE WITH A 1-DAY OFFER PERIOD?

HOW CAN SHAREHOLDER CONSENT BE OBTAINED?

IS IT MANDATORY TO OBTAIN SHAREHOLDER CONSENT VIA EMAIL OR REGISTERED POST?

WHAT ARE THE MODES OF ISSUING OFFER LETTERS?

CAN A PRIVATE LIMITED COMPANY DELIVER OFFER LETTERS BY HAND?

HOW LONG SHOULD PROOF OF DELIVERY BE KEPT?

WHAT IS THE MINIMUM PERCENTAGE REQUIRED FOR A SUCCESSFUL OFFER SUBSCRIPTION?

IS FILING OF PAS 3 MANDATORY?

ARE THERE ANY REQUIREMENTS TO ALTER MOA OR AOA?

WHAT IF 90% OF THE OFFER IS NOT SUBSCRIBED? CAN THE COMPANY OFFER SHARES TO THE PUBLIC?

CAN A SHAREHOLDER RELINQUISH THEIR RIGHT TO ANOTHER PERSON?

DO ALL SHAREHOLDERS NEED TO RECEIVE EQUAL OFFERS IN PROPORTION?

CAN A COMPANY OFFER SHARES THROUGH A RIGHTS ISSUE TO FOREIGN INVESTORS (SHAREHOLDERS)?

PLAN SHEET



DOWNLOAD ALL DRAFTS OF THE RIGHT ISSUE - FREE


  1. Board Resolution for the issue of Right Issue.

  2. Offer Letter.

  3. Application Form.

  4. Application Form for Renounced Shares

  5. Renunciation letter

  6. List of allottees in word

  7. List of allottees in Excel

  8. Consent of shareholder for shorter offer letter.

  9. Allotment of Equity Share Resolution





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