Allotment of Shares
There may be times when you want to change the share structure of your company; either by adding a new shareholder or by changing the existing proportion of shares between shareholders.
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Share allotment is the creation and issuing of new shares, by a company. New shares can be issued to either new or existing shareholders. Share allotment can have implications for any existing shareholders share proportion. Typically, new shares are allotted to bring on new business partners.
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As per the Companies Act, 2013 there are two ways by which a company can raise its funds. It can be done through the private placement of shares and rights issue of shares. If additional funds needs to be raised from existing shareholders, it can be done through rights issue. If funds are being raised through an external private Investment, it is done through a Private Placement.
Get Started
Step 1:
We collect all requisite documents including the companies AOA and MOA, details of new shareholders, valuation report, etc.
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Step 2:
We draft all required documents including board minutes, board resolutions, EGM notice, resolutions and minutes and assist in revising the MOA..
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Step 3:
After all signatures are done, we file the necessary forms with the ROC including Form MGT-14 and Form PAS-3. And assist in preparation of new Share Certificates
Timeline: 7 working days
Rs. 9,999
Stepwise Process For Allotment of Equity Shares of Private Limited Company
Valuation of shares and Changes in Authorised Capital
Company needs to ascertain the Value of Shares of the Company. This is done either by a Chartered Accountant, a registered Valuer or a Merchant Banker. New shares shall be issued as per such valuation report. This is alos used to determine whether the company needs to increase its Authorised Capital. Authorised Capital is the amount upto which a company can raise funds. In case the funds to be raised is higher than the Authorised Capital, an application needs to be made for the increase of the same.
Offer shares to the existing shareholders or for private placement
The existing shareholders of the company have the first right to any issue of share. In case the shares to be issued do not get fully subscribed by the existing shareholders then the directors can approach other investors. Being a private limited company, the shares can not be offered to the public, and there is a prohibition of advertisement of the same.
Obtain Board of Directors Approval and Shareholders Approval
To approve the allotment of new shares of the company, the director’s meeting is called, wherein the majority decides on approving the allotment of shares. Further, an extra-ordinary general meeting of shareholders is called to obtain approval of shareholders for the proposed allotment. Necessary resolutions are passed and filed with the ROC.
Filing of Return of Allotment
After the approval by the board of directors of the company and the Shareholders of the company, a return of allotment of equity shares is filed with the ROC in form No PAS-3. With the approval of the same by ROC, the paid-up capital of the company stands increased.