{"id":2938,"date":"2021-03-04T05:58:56","date_gmt":"2021-03-04T05:58:56","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=2938"},"modified":"2021-03-04T08:27:21","modified_gmt":"2021-03-04T08:27:21","slug":"process-for-right-issue","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/","title":{"rendered":"Process for Right Issue: A Simplified Guide"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Any company that\nwishes to offer shares to its existing shareholders or members in proportion to\ntheir shareholdings needs to undergo the process for <strong><a href=\"https:\/\/swaritadvisors.com\/rights-issue\" class=\"text-primary\">Rights Issue<\/a><\/strong>. It\nis one of the easiest and the flexible modes of raising the subscribed capital,\nthat, too, with less documentation and compliance requirements. Also, it shall\nbe noted that there is no need to involve any bank and financial institution in\nthe procedure for the right issue.<\/p>\n\n\n\n<p>In this learning\nblog, we will cover the concept, requirements, and process for Right Issue in\nIndia.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3aced6195bd\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3aced6195bd\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Concept_of_Right_Issue\" title=\"Concept of Right Issue\">Concept of Right Issue<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Benefits_of_the_Process_for_Right_Issue\" title=\"Benefits of the Process for Right Issue\">Benefits of the Process for Right Issue<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Minimum_Requirements_for_the_Process_for_Right_Issue_in_India\" title=\"Minimum Requirements for the Process for Right Issue in India\">Minimum Requirements for the Process for Right Issue in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Who_can_apply_for_the_Right_Issue_in_India\" title=\"Who can apply for the Right Issue in India?\">Who can apply for the Right Issue in India?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Employees\" title=\"Employees\">Employees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Existing_Shareholders\" title=\"Existing Shareholders\">Existing Shareholders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Any_other_person\" title=\"Any other person\">Any other person<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Steps_involved_in_the_Process_for_Right_Issue_in_India\" title=\"Steps involved in the Process for Right Issue in India\">Steps involved in the Process for Right Issue in India<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Prepare_a_list_of_Shareholders\" title=\"Prepare a list of Shareholders\">Prepare a list of Shareholders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Prepare_Necessary_Documents\" title=\"Prepare Necessary Documents\">Prepare Necessary Documents<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Send_Notice_for_Board_Meeting\" title=\"Send Notice for Board Meeting\">Send Notice for Board Meeting<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Hold_a_Board_Meeting\" title=\"Hold a Board Meeting\">Hold a Board Meeting<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Prepare_Minutes_of_the_Meeting_Held\" title=\"Prepare Minutes of the Meeting Held\">Prepare Minutes of the Meeting Held<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Furnish_Form_MGT_%E2%80%93_14\" title=\"Furnish Form MGT \u2013 14\">Furnish Form MGT \u2013 14<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Dispatch_Letter_of_Offer\" title=\"Dispatch Letter of Offer\">Dispatch Letter of Offer<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Convene_a_Board_Meeting\" title=\"Convene a Board Meeting\">Convene a Board Meeting<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Allot_Shares_within_60_Days\" title=\"Allot Shares within 60 Days\">Allot Shares within 60 Days<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Prepare_a_Complete_List_of_Shareholders\" title=\"Prepare a Complete List of Shareholders\">Prepare a Complete List of Shareholders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Call_a_Board_Meeting\" title=\"Call a Board Meeting \">Call a Board Meeting <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Prepare_Minutes_of_Meeting_Held\" title=\"Prepare Minutes of Meeting Held\">Prepare Minutes of Meeting Held<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Make_a_list_of_Allottees\" title=\"Make a list of Allottees\">Make a list of Allottees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Furnish_MCA_Form_PAS_3\" title=\"Furnish MCA Form PAS 3\">Furnish MCA Form PAS 3<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Make_required_Alterations_in_the_Register\" title=\"Make required Alterations in the Register\">Make required Alterations in the Register<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/swaritadvisors.com\/blog\/process-for-right-issue\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Right_Issue\"><\/span>Concept of Right Issue<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term Right Issues denotes a pre-emptive right given to the existing shareholders to subscribe to the new shares of the company. That means it works as a formal invitation to the existing shareholders. Further, it shall be noted that the provisions of section 62 of the Companies Act 2013 regulates the requirements and process of the right issue in India.<\/p>\n\n\n\n<p><strong>Also, Read:<\/strong> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/accounting-for-right-and-bonus-issue\/\">Accounting for Right and Bonus Issue<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_the_Process_for_Right_Issue\"><\/span>Benefits of the Process for Right Issue<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key benefits of the Process for Right Issue are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Assists-in-Raising-Subscribed-Capital-1024x377.png\" alt=\"Benefits of the Process for Right Issue\" class=\"wp-image-2943\" width=\"729\" height=\"268\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Assists-in-Raising-Subscribed-Capital-1024x377.png 1024w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Assists-in-Raising-Subscribed-Capital-300x110.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Assists-in-Raising-Subscribed-Capital-768x283.png 768w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Assists-in-Raising-Subscribed-Capital.png 1500w\" sizes=\"(max-width: 729px) 100vw, 729px\" \/><\/figure><\/div>\n\n\n\n<ul><li>Assists in Raising Subscribed Capital;<\/li><li>Facilitates Expansion of Business Operations;<\/li><li>Helps in the Avoidance of Fixed Interest Payments;<\/li><li>Minimises the Involvement of Banks and Financial\nInstitutions;<\/li><li>Improves the Debt-Equity Ratio;<\/li><li>Improves Company\u2019s Financial Health;<\/li><li>Curtails the Incurrence of Underwriting Charges;<\/li><li>Provides Right to Trade to Existing Shareholders;<\/li><li>Offers Shares in Proportion to the Shareholding;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Minimum_Requirements_for_the_Process_for_Right_Issue_in_India\"><\/span>Minimum Requirements for the Process for Right Issue in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The minimum\nrequirements for the process for Right Issue in India are as follows:<\/p>\n\n\n\n<ul><li>It is obligatory for every unlisted company to get\ntheir securities and shares converted into the dematerialised form prior to the\noffer of the right issue;<\/li><li>All the Promoters, Key Managerial Personnel, and\nDirectors need to hold their securities based on the provisions of the\nDepositories Act 1996;<\/li><li>Any shareholder who wishes to subscribe to the shares offered\nneeds to get their existing securities converted into dematerialised form as\nwell;<\/li><li>Every company that proposes to issue the Right Shares\nneed to check the availability of authorised capital as well. If in case, the\nsaid company does not have enough amount as Authorised Capital, then, in that\ncase, the company requires to alter its Capital Clause;<\/li><li>It shall be noted that only the existing shareholders\nare eligible to get the Right Shares in India;<\/li><li>Every company that wants to issue the right shares needs\nto check the authorisation from the Articles of Association. If in case not\nallowed, then, in that case, the company needs to alter its AOA or Articles of\nAssociation accordingly;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_apply_for_the_Right_Issue_in_India\"><\/span>Who can apply for the Right Issue in India?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Based on the provisions of section 62, the ones eligible to apply for Right Issue in India are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Employees-1024x184.png\" alt=\"Who can apply for the Right Issue in India?\" class=\"wp-image-2944\" width=\"719\" height=\"129\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Employees-1024x184.png 1024w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Employees-300x54.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Employees-768x138.png 768w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Employees.png 1101w\" sizes=\"(max-width: 719px) 100vw, 719px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Employees\"><\/span>Employees<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Under the scheme\nof the <strong><a href=\"https:\/\/swaritadvisors.com\/employee-stock-option-plan\" class=\"text-primary\">Employee Stock\nOption Plan<\/a><\/strong> (ESOP), a company can issue the right shares to its\nemployees. However, the same is possible only after passing the Special\nResolution and adhering to the conditions specified.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Existing_Shareholders\"><\/span>Existing Shareholders<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A company can offer the right shares to its existing\nmembers or shareholders in proportion to their shareholdings. The same can be\ndone by sending a letter of offer to the shareholder. However, it shall be\nnoted that a company required to fulfil the conditions as follows for issuing\nrights shares:<\/p>\n\n\n\n<ul><li>A company requires to send a letter of offer (LOO) to the existing shareholders;<\/li><li>The LOA sent must specify the number of shares offered under the process for Right Issue; <\/li><li>All the shareholders need to accept the offer sent in a minimum of fifteen days and a maximum of thirty days;<\/li><li>The offer stands declined if the shareholders do not accept the same in the given time;<\/li><li>Also, it shall be noted that a letter of offer includes the right to renounce to another person as well;<\/li><li>After the expiry of the period prescribed or on the receipt of rejection from the shareholders, the <a href=\"https:\/\/en.wikipedia.org\/wiki\/Board_of_directors\">Board of Directors<\/a> can dispose of the shares offered in the manner advantageous for the company and shareholders;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Any_other_person\"><\/span>Any other person<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A company can offer the right shares to any other\nperson as well by passing a Special Resolution (SR). The same can either be\nissued in the form of cash or for any consideration other than cash. However,\nit shall be noted that the registered valuer calculates the price of such\nshares by preparing a valuation report subject to prescribed conditions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Steps_involved_in_the_Process_for_Right_Issue_in_India\"><\/span>Steps involved in the Process for Right Issue in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The steps involved in the process for Right Issue in India are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Prepare-a-list-of-Shareholders-1024x841.png\" alt=\"Process for Right Issue in India\" class=\"wp-image-2946\" width=\"573\" height=\"470\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Prepare-a-list-of-Shareholders-1024x841.png 1024w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Prepare-a-list-of-Shareholders-300x246.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Prepare-a-list-of-Shareholders-768x631.png 768w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Prepare-a-list-of-Shareholders.png 1602w\" sizes=\"(max-width: 573px) 100vw, 573px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prepare_a_list_of_Shareholders\"><\/span>Prepare a list of Shareholders<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the first step, the directors require to prepare\na list of the shareholders existing, together with the particulars of the\nshares held by them. The same is required to determine the total number of\nshares received by the shareholders.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prepare_Necessary_Documents\"><\/span>Prepare Necessary Documents<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The directors require to draft and prepare the\nnecessary documents as follows:<\/p>\n\n\n\n<ul><li>Share\nApplication Form;<\/li><li>Letter of\nRenunciation (LOR);<\/li><li>Letter of Offer\n(LOO) for the right issue;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Send_Notice_for_Board_Meeting\"><\/span>Send Notice for Board Meeting<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Further, a notice concerning the Board Meeting needs\nto be sent at least seven days prior to the date of the meeting. Also, the\nnotice sent must be in a manner prescribed under the provisions of section 173\n(3) of the Companies Act and clause 1 of the Secretarial Standard &#8211; 1.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Hold_a_Board_Meeting\"><\/span>Hold a Board Meeting<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Now, in the Board Meeting (BM) held, the directors\nrequire to discuss and pass the resolution on the following agendas:<\/p>\n\n\n\n<ul><li>Approval of the Letter of Offer (LOO);<\/li><li>Approval of the Share Application Form;<\/li><li>Approval of the Right Issue;<\/li><li>To decide the proportion for the right offer;<\/li><li>To decide the issue price of shares;<\/li><li>To fix a record date for the offer;<\/li><li>To authorise Company Secretary or Directors to sign\nthe document;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prepare_Minutes_of_the_Meeting_Held\"><\/span>Prepare Minutes of the Meeting Held<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Now, in the next step of the process for Right Issue,\nthe Company Secretary needs to prepare the minutes of the Board Meeting held.\nAlso, he\/ she requires to circulate the same to the directors within a period\nof fifteen days, beginning from the date of the conclusion of the meeting. <\/p>\n\n\n\n<p><strong>Further, the company\nneeds to send minutes by either of the methods as follows:<\/strong><\/p>\n\n\n\n<ul><li>Hand Delivery;<\/li><li>Registered Post;<\/li><li>Speed Post;<\/li><li>Courier;<\/li><li>E-mail;<\/li><li>Any other\nrecognised means;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Furnish_Form_MGT_%E2%80%93_14\"><\/span>Furnish Form MGT \u2013 14<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>After passing the BR (Board Resolution), the\ndirectors of the company need to file MCF Form MGT &#8211; 14 with the Registrar of\nCompanies within a period of thirty days. <\/p>\n\n\n\n<p>However, it shall be noted that a <strong><a href=\"https:\/\/swaritadvisors.com\/public-limited-company-registration\" class=\"text-primary\">public limited\ncompany<\/a><\/strong> is exempt from filing the board resolution pertaining to the\nright issue.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Dispatch_Letter_of_Offer\"><\/span>Dispatch Letter of Offer<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In this step, the directors need to dispatch a\nletter of offer (LOO) to all the existing shareholders by way of a registered\npost\/ courier\/ speed post\/ hand delivery or e-mail, etc., at least three days\nprior to the opening of the right issue. <\/p>\n\n\n\n<p>Further, the letter of offer sent must specify the\nnumber of shares offered. Also, the same needs to be kept open for a minimum period\nof fifteen and a maximum period of thirty days. <\/p>\n\n\n\n<p>However, it shall be noted that in the case of <strong><a href=\"https:\/\/swaritadvisors.com\/private-limited-company-registration\" class=\"text-primary\">private limited\ncompanies<\/a><\/strong>, a period not less than three days is valid as well if 90% of\nthe shareholders or members have given their consent for the same.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Convene_a_Board_Meeting\"><\/span>Convene a Board Meeting<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the next step of the process for Right Issue, the\ndirectors require to hold a board meeting after getting the following listed\nfrom the holders:<\/p>\n\n\n\n<ul><li>Acceptance\/\nRejection\/ or Renunciation of the right;<\/li><li>Share\nApplication Money;<\/li><\/ul>\n\n\n\n<p>The company needs to dispatch the notice for the board\nmeeting at least seven days prior to the date of the meeting.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Allot_Shares_within_60_Days\"><\/span>Allot Shares within 60 Days<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Now, in the next\nstep of the process for Right Issue, the company will require to allot the\nshares within a period of sixty days, starting from the date of receipt of the\nshare application money.<\/p>\n\n\n\n<p>Further, if in\ncase the company was unable to allot the shares, then, in that case, it\nrequires to refund all the application money received within a period of\nfifteen days, starting from the completion of sixty days.<\/p>\n\n\n\n<p>However, it\nshall be noted that if in case the company fails to refund the amount received,\nit will be held liable to pay interest at a rate of 12% from the expiry of the\n60<sup>th<\/sup> day.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prepare_a_Complete_List_of_Shareholders\"><\/span>Prepare a Complete List of Shareholders<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Further, in the process for Right Issue, the\ndirectors need to make a complete list of shareholders, together with the\ndetails as follows:<\/p>\n\n\n\n<ul><li>Name of the\nRenouncing Shareholders;<\/li><li>Name of the\nDeclining Shareholders;<\/li><li>&nbsp;Name of the Shareholder, who have subscribed\nmore than the shares offered;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Call_a_Board_Meeting\"><\/span>Call a Board Meeting <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>After that, the directors of the issuer company need\nto call a board meeting within a period of sixty days from the date of receipt\nof application money. The reason behind the same is to discuss and pass\nresolutions on the issues as follows:<\/p>\n\n\n\n<ul><li>Allotment of\nShares to the applicants who have applied for shares;<\/li><li>Approval for the\nissuance of Share Certificates;<\/li><li>Approval for\nmaking relevant entries in the Register of Members;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prepare_Minutes_of_Meeting_Held\"><\/span>Prepare Minutes of Meeting Held<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the next step of the process for Right Issue, the\nCompany Secretary (CS) prepares the minutes of the Board Meeting held and\ncirculates the same to all the directors within a period of fifteen days,\ncommencing from the date of conclusion of the meeting. <\/p>\n\n\n\n<p>Further, the different ways of sending the minutes\nof the meeting are as follows: <\/p>\n\n\n\n<ul><li>Speed Post;<\/li><li>Hand Delivery;<\/li><li>Courier;<\/li><li>Registered Post;<\/li><li>E-mail;<\/li><li>Any other\nrecognised means;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Make_a_list_of_Allottees\"><\/span>Make a list of Allottees<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Now, to proceed further in the process for Right\nIssue, the directors of the company require to make a complete list of the\nAllottees and will file it with the ROC.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Furnish_MCA_Form_PAS_3\"><\/span>Furnish MCA Form PAS 3<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The directors require to furnish the Return of\nAllotment in MCA Form PAS 3, together with all the necessary attachments to the\nROC (Registrar of Companies). The same must be done within a period of thirty\ndays from the date of allotment of shares.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Make_required_Alterations_in_the_Register\"><\/span>Make required Alterations in the Register<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the last step for the process for Right Issue,\nthe company requires to make necessary entries in the Register of Members\nwithin a period of seven days of passing of the BR for the allotment of shares.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, Right Issue is a formal invitation to the existing shareholders to subscribe to the new shares of the company in proportion to their shareholding. Further, it is one of the easiest and flexible modes of raising subscribed capital and involves fewer documentation and compliance requirements. However, to undergo the process for Right Issue in India, the company needs to comply with the requirements and steps mentioned above.<\/p>\n\n\n\n<p><strong>Also, Read:<\/strong> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/step-by-step-procedure-for-rights-issue-of-shares\/\">Step by Step Procedure for Rights Issue of Shares<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Any company that wishes to offer shares to its existing shareholders or members in proportion to their shareholdings needs to undergo the process for Rights Issue. It is one of the easiest and the flexible modes of raising the subscribed capital, that, too, with less documentation and compliance requirements. Also, it shall be noted that [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":2939,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[455,64],"tags":[456],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/2938"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=2938"}],"version-history":[{"count":8,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/2938\/revisions"}],"predecessor-version":[{"id":2975,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/2938\/revisions\/2975"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/2939"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=2938"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=2938"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=2938"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}