Issue of shares
This query is : Resolved
16 March 2013
is special resolution reqiured to be passed; i.e. form 23 required to be filed if shares are issued at premium by a private ltd. co.
16 March 2013
Hi
The provision of section 81 is not applicable on private limited company.
No need to file Form-23 only Ordinary resolution and Board Resolution is sufficient.
The provision of section 81 is not applicable on private limited company.
No need to file Form-23 only Ordinary resolution and Board Resolution is sufficient.
16 March 2013
thank u sir.can u tell me the procedure to be followed for issuing share at premium by a private limited co.
02 August 2024
Issuing shares at a premium by a private limited company involves several steps to ensure compliance with the Companies Act, 2013. Here’s a detailed procedure to follow:
### Procedure for Issuing Shares at a Premium by a Private Limited Company
1. **Board Meeting and Approval:**
- **Convening Board Meeting:** Call a Board meeting to discuss and approve the issuance of shares at a premium.
- **Passing Resolution:** The Board of Directors should pass a resolution approving the issuance of shares at a premium. The resolution should specify the number of shares to be issued, the issue price (including the premium), and the reason for issuing shares at a premium.
2. **Valuation Report (if applicable):**
- **Obtain Valuation Report:** If the shares are being issued at a significant premium, it is advisable to obtain a valuation report from a registered valuer to justify the premium amount. This is especially important if the premium is substantial or if there are regulatory requirements to adhere to.
3. **Issue of Share Application Form:**
- **Application Form:** Prepare and send out share application forms to the prospective investors detailing the issue price, premium, and other relevant information.
4. **Receipt of Application Money:**
- **Collect Application Money:** Ensure that the application money, including the premium amount, is received from the applicants and deposited into the company’s bank account.
5. **Allotment of Shares:**
- **Allotment Meeting:** Convene a Board meeting to formally allot the shares to the applicants. The meeting should record the details of the allotment, including the number of shares allotted, the issue price, and the premium received.
- **Pass Allotment Resolution:** Pass a Board resolution confirming the allotment of shares and the receipt of the premium.
6. **Update Register of Members:**
- **Register of Members:** Update the Register of Members to reflect the newly allotted shares and the details of the shareholders.
7. **Issue Share Certificates:**
- **Prepare Share Certificates:** Issue share certificates to the shareholders with details of the number of shares allotted and the premium paid.
- **Sign Certificates:** Ensure that the share certificates are signed by authorized signatories of the company.
8. **File with Registrar of Companies (ROC):**
- **File Return of Allotment:** File the Return of Allotment (Form PAS-3) with the Registrar of Companies within 30 days of the allotment. This form includes details of the allotment, including the amount of premium received.
9. **Update Share Capital in Financial Statements:**
- **Reflect Premium in Accounts:** Update the financial statements to reflect the increase in share capital and the amount of premium received. The premium amount should be credited to the “Securities Premium Account” in the company’s balance sheet.
10. **Compliance with SEBI Regulations (if applicable):**
- **Ensure Compliance:** If the company is listed or if there are other specific regulations applicable to the issue, ensure compliance with the relevant Securities and Exchange Board of India (SEBI) regulations.
### Key Points to Consider
- **Legal Compliance:** Ensure compliance with the Companies Act, 2013, and any other applicable regulations.
- **Valuation:** Obtain a professional valuation if required to justify the premium amount.
- **Documentation:** Maintain all records and documentation related to the issue of shares at a premium for future reference and compliance.
### Relevant Provisions in Companies Act, 2013
- **Section 52:** Deals with the “Securities Premium Account” and the utilization of securities premium.
- **Section 62:** Governs the “Issue of Share Capital” and includes provisions for issuing shares at a premium.
- **Rule 13 of Companies (Share Capital and Debentures) Rules, 2014:** Provides details on the procedures for the issuance of shares.
By following these steps, a private limited company can successfully issue shares at a premium while adhering to legal requirements and ensuring proper documentation and compliance.
### Procedure for Issuing Shares at a Premium by a Private Limited Company
1. **Board Meeting and Approval:**
- **Convening Board Meeting:** Call a Board meeting to discuss and approve the issuance of shares at a premium.
- **Passing Resolution:** The Board of Directors should pass a resolution approving the issuance of shares at a premium. The resolution should specify the number of shares to be issued, the issue price (including the premium), and the reason for issuing shares at a premium.
2. **Valuation Report (if applicable):**
- **Obtain Valuation Report:** If the shares are being issued at a significant premium, it is advisable to obtain a valuation report from a registered valuer to justify the premium amount. This is especially important if the premium is substantial or if there are regulatory requirements to adhere to.
3. **Issue of Share Application Form:**
- **Application Form:** Prepare and send out share application forms to the prospective investors detailing the issue price, premium, and other relevant information.
4. **Receipt of Application Money:**
- **Collect Application Money:** Ensure that the application money, including the premium amount, is received from the applicants and deposited into the company’s bank account.
5. **Allotment of Shares:**
- **Allotment Meeting:** Convene a Board meeting to formally allot the shares to the applicants. The meeting should record the details of the allotment, including the number of shares allotted, the issue price, and the premium received.
- **Pass Allotment Resolution:** Pass a Board resolution confirming the allotment of shares and the receipt of the premium.
6. **Update Register of Members:**
- **Register of Members:** Update the Register of Members to reflect the newly allotted shares and the details of the shareholders.
7. **Issue Share Certificates:**
- **Prepare Share Certificates:** Issue share certificates to the shareholders with details of the number of shares allotted and the premium paid.
- **Sign Certificates:** Ensure that the share certificates are signed by authorized signatories of the company.
8. **File with Registrar of Companies (ROC):**
- **File Return of Allotment:** File the Return of Allotment (Form PAS-3) with the Registrar of Companies within 30 days of the allotment. This form includes details of the allotment, including the amount of premium received.
9. **Update Share Capital in Financial Statements:**
- **Reflect Premium in Accounts:** Update the financial statements to reflect the increase in share capital and the amount of premium received. The premium amount should be credited to the “Securities Premium Account” in the company’s balance sheet.
10. **Compliance with SEBI Regulations (if applicable):**
- **Ensure Compliance:** If the company is listed or if there are other specific regulations applicable to the issue, ensure compliance with the relevant Securities and Exchange Board of India (SEBI) regulations.
### Key Points to Consider
- **Legal Compliance:** Ensure compliance with the Companies Act, 2013, and any other applicable regulations.
- **Valuation:** Obtain a professional valuation if required to justify the premium amount.
- **Documentation:** Maintain all records and documentation related to the issue of shares at a premium for future reference and compliance.
### Relevant Provisions in Companies Act, 2013
- **Section 52:** Deals with the “Securities Premium Account” and the utilization of securities premium.
- **Section 62:** Governs the “Issue of Share Capital” and includes provisions for issuing shares at a premium.
- **Rule 13 of Companies (Share Capital and Debentures) Rules, 2014:** Provides details on the procedures for the issuance of shares.
By following these steps, a private limited company can successfully issue shares at a premium while adhering to legal requirements and ensuring proper documentation and compliance.
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