BL/U3 Topic 5 Allotment and Transfer of Share
- PRIVATE PLACEMENT (SECTION: 42)
(i) A private placement offer cannot be made to more than 200 people in aggregate in a financial year excluding “qualified institutional buyers” and employees of the company being offered securities under a scheme of employee’s stock option as per provisions of clause (b) of sub-section (1) of section 62.
Where “Qualified institutional buyer” means the qualified institutional buyer as defined in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended from time to time.
(ii) If a company, whether listed or unlisted makes an offer to allot or invites subscription, or allots, or enters into an agreement to allot, securities to more than 200 persons, whether the payment for the securities has been received or not or whether the company intends to list its securities or not on any recognized stock exchange in or outside India, the same shall be deemed to be an offer to the public and shall accordingly be governed by the provisions of Part I of chapter III.
(iii) No fresh offer or invitation under this section shall be made unless the allotments with respect to any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or abandoned by the company.
(iv) Any allottee under a private placement offer/invitation shall not transfer his/its securities to more than 20 persons during a quarter and the company shall not register any transfer which is not in conformity with this requirement.
(v) The number of such offers or invitations shall not exceed 4 in a financial year and not more than once in a calendar quarter with a minimum gap of 60 days between any 2 such offers or invitations.
(vi) The value of such offer or invitation shall be with an investment size of not less than Rs. 50,000/- per person.
(vii) No company offering securities under this section shall release any public advertisements or utilize any media, marketing or distribution channels or agents to inform the public at large about such an offer.
(viii) Any offer or invitation not in compliance with the provisions of this section shall be treated as a public offer and all provisions of this Act, and the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992 shall be required to be complied with.
(i) Send Notice for convening Board Meeting atleast 7 days before convening the Board Meeting.
(Ii) Notice shall be sent to shareholders for convening of Extra Ordinary General Meeting for the approval of private placement offer Letter.
(iiI) Draft the private placement offer letter.
(iv) Special Resolution shall be passed in the EGM so convened, which shall remain valid for a period of 12 months.
(v) File Form MGT -14 with the ROC within 30 days of passing Special Resolution.
(vi) Issue offer letter in PAS-4 within 30 days of record of name of persons
(vii) Prepare complete record of Private Placement in PAS-5
(viii) File Form PAS-4 and Form PAS-5 with ROC within 30 days of issue of offer letter in Form GNL-2
(ix) Make Allotment of shares within 60 days of receipt of Money from the persons to whom right was given.
(x) Call Board Meeting for allotment of shares
(xi) File PAS-3 with ROC within 30 days of Allotment.
- RIGHTS ISSUE OF SHARES (SECTION: 62)
(I) As per Section 62 (1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered:
(a) to persons who, at the date of the offer, are holders of equity shares of the company in proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of offer subject to the following conditions, namely: –
(i) the offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date of the offer within which the offer, if not accepted by 90% of its members, shall be deemed to have been declined;
(ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person; and the notice referred to in clause (i) shall contain a statement of this right;
(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose of them in such manner which is not dis-advantageous to the shareholders and the company;
(ii) Send Notice for convening Board Meeting atleast 7 days before convening the Board Meeting.
(iii) Pass a Board resolution for approving “Letter of offer”. The offer letter shall include right of renunciation also.
(iv) Send the Letter of offer to all existing shareholders through registered post or speed post or through electronic mode at least three days before the opening of the issue.
(v) Receive acceptance, renunciations, rejection of rights from shareholders.
(vi) Issue notice in writing to every Director at least seven days’ before convening the Board meeting. [Sec 173 (3)]
(vii) Convene a Board Meeting and pass Board resolution approving the allotment and issue of shares.
(viii) File with Registrar a return of allotment in E-Form PAS-3 within 30 days of allotment of shares.