Introduction

1. A Right Issue means an issue of capital to the

existing shareholders of the Company through
letter of offer on a prodata basis.

2. The offer made to the existing shareholder is

not binding upon them.
Process of Right Issue
Check if Articles permit the issue of securities under right issue. Otherwise,
first amend the Articles.

Check whether securities issued are within the limit of authorized share capital
of the company. Otherwise, first amend Memorandum and Articles.

Obtain the certificate of valuation of shares from a Chartered Accountant for

the purpose of deciding the issue price of the shares.
Issue notice of Board Meeting to all the Directors at least Seven days before the
meeting.

Convene a board Meeting to:

o To Consider proposal for ‘Right Issue of Securities’;
o To approve the “Letter of Offer”. The offer letter shall include right of
renunciation also;
o To fix a date as a record date for drawing up a list of members eligible to
receive the offer;
o Authorize a director of Company to issue Letter of Offer.

Post Board Meeting Actions

o Dispatch Letter of offer to all the existing shareholders at least three days
before opening the Issue.
o Offer will be open for minimum 15 days and maximum for 30 days.
o Receive acceptance, renunciations, rejection of rights from shareholders.
Issue notice of Board Meeting to all the directors of Company at least 7 days
before the date of Board Meeting for Allotment of Shares.

Convene a board Meeting to:

o Acknowledgment of receipt of funds;
o Present list of allottees to which the shares are to be issued;
o Pass Board Resolution for allotment of Shares;
o File Return of Allotment of securities to the ROC within 30 days from the
date of Allotment in form PAS-3 & MGT-14 within 30 days from the date of
issue of securities.

Apply to Stamping authority for Consolidated Stamp duty on share Certificates.

Issue of Share Certificates as per the provisions of section 46 of the Companies

Act, 2013 to the shareholders within a period of 2 months from the date of
allotment.
Important points to Remember

Company shall make allotment under

Private Company is not required to
right issue within 60 days from the
file MGT-14 for Issue of Securities.
date of receipt of application money.

The offer period of minimum 15 days

Though obtaining CA valuation
and maximum 30 days & despatch of
certificate is not mandatory in case
letter of offer at least 3 days before the
shares right issue. However for
opening of issue this can be reduced
income tax point of view,
in case of Private Company if 90%
sometimes, getting valuation
members has given their consent in
becomes a necessity.
writing or in electronic mode.
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