Issue of Right Share by Private Company

It is now well settled that only one pre-emptive offer is to be made which is otherwise (should be ‘either’) to be acceptable or not at all.

It is now well settled that only one pre-emptive offer is to be made which is otherwise (should be ‘either’) to be acceptable or not at all. The existing shareholders are not to be given further pre-emptive rights in respect of those unaccepted shares. Even such first right can be waived or modified.

Procedure of issue of Right Share

Call Board Meeting: Notice should be issued before 7 days of the board meeting to every board of directors. In Board meeting agenda & notes of agenda also enclosed with the notice of meeting.

Hold the Board Meeting: In the board meeting the director should pass a resolution for approve the offer letter of right issue of share. The director also authorized to a director of the company to issue offer letter to shareholder.
Offer Letter to Shareholder: The offer letter with application dispatch to the existing shareholders. The application had all the conditions along with last date of the offer.

Issue of Shares: Collect all the offer after due date and make list of proposed allottees. Issue the right shares to eligible applicant.

File Form to MCA: After successful of allotment the form PAS-3 files to registrar of company.
Issue of Share Certificate: After completing all the formalities the share certificate issue to every shareholder and record the necessary information in members register.

Documents Required

  • Notice of Board Meeting
  • Board Resolution
  • Board meeting Agenda with Notes
  • Offer letter of shareholder
  • Successful Allottee list with Share details

Frequently asked questions

What is the right issue of share?

The right issue means shares issue to the existing shareholder in the ratio of there existing shareholding.

What is the share certificate?

A share certificate is evidence of share capital holding of the company. As per company act all company should be issued share certificate to every shareholder.

Who can issue the share certificate?

The directors of the company can issue the share certificate to the members.

Who can issue new shares?

The board of directors can be issue new shares to shareholder but subject to the Article of association of the company.

What is the premium of share?

The issue of share above the face value is called the premium.