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Rights Issue

pooja (student) (46 Points)

13 June 2019

Can a rights issue offer period be extended by passing BR?

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5 Replies

Jatin Bajaj (CS) (2930 Points)
Replied 14 June 2019

As per the provisions of Section 62 of the Companies Act 2013, right issue of shares means the shares in which the shares are issued to the existing shareholders on pro rata basis on the basis of the proportion of the existing shares held by them.

Right issue of shares can be governed by sending the draft letter of offer to the existing shareholders atleast 3 days before the date of opening of issue. Provided in case of private Company draft offer of letter can be made shorter than 3 days if 90 percent of the shareholder has consented in writing and has agreed on sending the draft letter in shorter span of time.

The offer letter shall remain valid minimum for a period of 15 days and maximum for the period of 30 days.

pooja (student) (46 Points)
Replied 14 June 2019

Offer letter was first issued for 15 days...my query is can it be extended to 30 days?

User01 (Still studying ) (2 Points)
Replied 15 June 2019

Dear Ms. Pooja

Companies Act, 2013 restricts the offer period of rights issue. A plain reading of Section 62(1)(a) states the offer period shall not exceed maximum of 30 days.
Further in this case as the Act itself impose the timeline for offer period i. e.,upto 30 days hence we can't exceed the same by passing board resolution.

Thankyou

CS M Pota (Company Secreatary) (3186 Points)
Replied 15 June 2019

Yes, if first offer period is of 15 days the Board may extend the last date for receipt of the application form by such period as it may deem fit or to close the offer earlier upon receipt of full subscripttion but the the offer shall not be opend for exceeding a maximum period of thirty days from the date of opening of this offer.

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