Allotment of shares

This query is : Resolved 

(Querist) 18 September 2012

Hello members,

Kindly inform me that what is the time limit to allot the shares to the shareholders after receiving the share application money for a Unlisted Company.

Also guide me for the steps to be taken for this purpose?

Ajay Mishra (Expert) 18 September 2012


As per Rule 8 of the Unlisted Public Companies (Preferential Allotment)
Rules, 2003,invitation and Allotment of Securities:-
(1) No fresh offer or invitation shall be made unless the allotment with respect to any offer or invitation made earlier have been completed in terms of sub-section (9) of Section 60B of the Companies Act, 1956.
(2) Any offer or invitation not in compliance with sub-section (1A) of Section 81 read with sub-section (3) of section 67 of the said Act, shall be treated as public offer and the provisions of the Securities Contract (Regulation) Act, 1956 (42 of 1992) and the Securities and Exchange Board of India Act, 1992 shall be complied with.
(3) All monies payable on subscription of securities shall be paid through cheque or demand draft or other banking channels but not by cash.
(4) Any allotment of securities shall be completed within sixty days from the receipt of application money and in case the company is not able to allot the securities within the said period of sixty days, it shall repay the application money within 15 days thereafter, failing which it will be required to be re-paid with interest at the rate of 12% per annum.
Provided that the monies received on such application shall be kept in a separate bank account and shall not be utilize for any purpose other than:-
(i) for adjusting against allotment of securities; or
(ii) for the repayment of monies where the company is unable to allot securities.
(5) No company offering securities shall release any public advertisement or utilize any media, marketing or distribution channels or agents to inform the public at large about such an offer. (Inserted by amendments as on 14.12.2011)

Anumita Sharma (Querist) 19 September 2012

Thnaks Ajay Sir

Ajay Mishra (Expert) 19 September 2012


Plese kept in mind that the time period of shareholder resolution is only one year. after that you the effect of such resolution will expire under section 81(1A) as per this amended Rule.

Anumita Sharma (Querist) 19 September 2012

What does its mean sir?

Ajay Mishra (Expert) 19 September 2012


Kindly read Rule 4 of the said Rule which is given below:

4. Special Resolution.-
(1) No issue of shares or any other instruments convertible into shares including hybrids convertible into shares on a preferential basis can be made by a company unless authorized by its articles of association and unless a special resolution is passed by the members in a General Meeting authorizing the Board of Directors to issue the same.
(2) The Special resolution referred to in sub-rule (1) shall be acted upon within a period

Anumita Sharma (Querist) 19 September 2012


CS Ankur Srivastava (Expert) 20 September 2012

Nice explanation by our expert Ajay ji...

Ajay Mishra (Expert) 20 September 2012

Thank u Ankur G.....

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