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Startup Counter

THINGS TO KNOW BEFORE YOU REGISTER- ALLOTMENT OF FRESH SHARES THROUGH RIGHT ISSUE

Right issue means issuing of extra shares. In order to avoid dillution of stake of existing shareholders, a company may raise additional capital from its members by issuing “rights” shares in proportion of their current holding. Private placement is a common method of raising business capital through offering equity shares or other securities directly to a limited number of investors. Preferential allotment is the process by which allotment of shares is done on a preferential basis to a select group of investors.A company may plan to raise funds for its future expansion and reducing debts through preferential allotment.

RIGHT SHARES
introduction

INTRODUCTION

Right issue is a invitation to existing shareholders to purchase shares. In order to avoid dillution of stake of existing shareholders, a company may raise additional capital from its members by issuing "rights" shares in proportion of their current holding. More specifically this type of issue gives existing shareholders right to purchase new shares at a discount to the market price on a stated future date.

Private placement
means an offer or invitation to subscribe shares or other securities to a selected group of persons through issue of a private placement offer letter subject to some conditions.

Preferential allotment
is the process by which allotment of shares is done on a preferential basis to a select group of investors.A company may plan to raise funds for its future expansion and reducing debts through preferential allotment.

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DOCUMENTS REQUIRED

Procedure of Right issue of shares/ Private placement/ Preferntial Allotment

Step - 1 : Company will decide cut off date.

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Step - 2 : Company will prepare "Letter of Offer" attached as Annexure-A

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Step - 3 : Call board meeting and pass resolution for right issue & offer letter(resolution attached as Annexure-B).

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Step - 4 : Authorize a director to issue letter of offer.

registration form

Step - 5 : Than after receiving money from shareholders, again hold a board meeting.

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Step - 6 : Present list of allottes before the meeting and pass board resolution for allotment of shares(within 60 days of receiving of money).

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Step - 7 : File form(PAS-3) with ROC.

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Step - 8 : Issue share certificates(pass board resolution to issue share certificate).

Trademark

Step - 9 : File Form- MGT-14 in case of Private Placement/Preferential allotment

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