what is procedure for rights issue of shares by a pvt. ltd. company as per companies act, 2013. What are the MCA Forms which are needed to be filed alongwith attachment
22 July 2025
Here’s a detailed answer on the procedure for Rights Issue by a Private Limited Company under the Companies Act, 2013, along with MCA filing requirements and a note on partly paid shares.
1️⃣ Procedure for Rights Issue by a Private Limited Company (Companies Act, 2013): Step 1: Board Resolution The Board of Directors must pass a Board Resolution approving the Rights Issue.
The resolution should specify:
Number of shares to be offered.
Ratio of rights shares (e.g., 1:4 means 1 new share for every 4 existing shares).
Price at which shares will be offered.
Time frame for the offer.
Step 2: Offer to Existing Shareholders The company offers shares proportionately to existing shareholders by issuing a Letter of Offer / Offer Letter.
Rights shares are offered for a limited period (typically 15–30 days).
Step 3: Acceptance and Payment Shareholders subscribe and pay for shares within the offer period.
Shareholders may accept fully, partially, or renounce their rights (transfer to others).
Step 4: Allotment of Shares After the subscription period closes, the Board passes a resolution for allotment of rights shares.
Shares are allotted to subscribers, and share capital is updated accordingly.
2️⃣ MCA Filings Required for Rights Issue: Form Purpose Attachment / Notes Due Date MGT-7 Annual Return filing Includes updated shareholding pattern Within 60 days of AGM AOC-4 Filing financial statements Reflect updated capital after allotment Within 30 days of AGM PAS-3 Return of allotment of shares Details of allotment along with payment info Within 30 days of allotment MGT-14 Filing of Board Resolution Resolution approving rights issue Within 30 days of Board meeting
3️⃣ Can Rights Shares be Partly Paid-Up? Yes, under the Companies Act, 2013, rights shares can be issued as partly paid-up shares.
The company can decide the face value, issue price, and the amount payable upfront (e.g., 25% paid initially).
The balance amount becomes a call money payable later on demand.
Proper disclosure of the partly paid-up status must be made in PAS-3 filing.
Follow the provisions of Section 39 (calls on shares) and Section 40 (payment of calls).
Summary Topic Key Point Rights Issue Procedure Board Resolution → Offer Letter → Subscription → Allotment MCA Forms MGT-14 (Board Res), PAS-3 (Allotment), MGT-7, AOC-4 Partly Paid Shares Allowed under Companies Act, with proper disclosures
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