Further issue of preference shares

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Puniti (Querist)
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09 December 2009 Can u plz provide a checklist for further issue of preference shares along with listing compliances, if any, since the company's equity shares are listed.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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09 December 2009 kindly provide your mail id

Puniti

Puniti (Querist)
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10 December 2009 puniti_acs@rediffmail.com

plz forward asap.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2024 Certainly! When a company plans for a further issue of preference shares and its equity shares are already listed on a stock exchange, several compliance requirements and considerations need to be taken into account. Here's a checklist to guide you through the process:

### Checklist for Further Issue of Preference Shares (Listed Company)

#### Pre-Issue Considerations:

1. **Board Approval:**
- Obtain approval from the Board of Directors for issuing preference shares, including the terms and conditions.

2. **Shareholders' Approval:**
- If required under the Companies Act, obtain approval from shareholders through a special resolution or as per the Articles of Association.

3. **Compliance with Listing Agreement/SEBI Regulations:**
- Check the provisions of the Listing Agreement (if applicable) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 regarding issuance of preference shares.

4. **Valuation Report:**
- Get a valuation report for the shares issued, if required under the applicable regulations.

5. **Drafting of Prospectus/Information Memorandum:**
- Prepare a draft prospectus or an information memorandum detailing the terms of the issue for approval by the Board.

6. **Due Diligence:**
- Conduct due diligence to ensure compliance with all regulatory requirements and internal policies.

#### Issue of Preference Shares:

7. **Allotment:**
- Allot preference shares based on the terms approved by the Board and shareholders.

8. **Filing with Registrar of Companies (RoC):**
- File necessary forms with the RoC within the prescribed timelines, as per the Companies Act, 2013.

9. **Filing with Stock Exchange:**
- Inform the stock exchange(s) where the equity shares are listed about the issue of preference shares.

10. **Payment of Stamp Duty:**
- Ensure payment of stamp duty on the issuance of preference shares, as applicable under the respective state laws.

11. **Compliance Certificate:**
- Obtain a compliance certificate from a practicing Company Secretary or Chartered Accountant regarding the compliance with all regulatory requirements.

#### Post-Issue Compliance:

12. **Listing of Preference Shares:**
- Ensure listing of preference shares on the stock exchange where equity shares are listed, if required.

13. **Disclosure Requirements:**
- Comply with ongoing disclosure requirements under SEBI (LODR) Regulations, including disclosures of allotments, shareholding patterns, etc.

14. **Annual Filings:**
- File annual returns and financial statements with the RoC and stock exchanges as per the prescribed timelines.

15. **Shareholder Communication:**
- Communicate the details of the issue and any material developments to the shareholders in a timely manner.

#### Additional Considerations:

16. **Tax Implications:**
- Evaluate tax implications for the company and shareholders arising from the issue of preference shares.

17. **Legal Review:**
- Ensure that all legal aspects related to the issue of preference shares are reviewed by legal counsel.

18. **Monitoring and Compliance:**
- Establish mechanisms to monitor ongoing compliance with regulatory requirements post-issuance.

19. **Corporate Governance:**
- Adhere to principles of good corporate governance throughout the issuance process.

### Note:
- The checklist may vary depending on specific circumstances and the nature of the company's business. It's advisable to consult with legal advisors, chartered accountants, and company secretaries to ensure comprehensive compliance with all applicable laws and regulations.

This checklist provides a broad overview of the key steps involved in the further issue of preference shares by a listed company. Each step should be carefully followed to ensure compliance with regulatory requirements and to facilitate smooth execution of the share issuance process.

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