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List of Resolution for which MGT-14 requires to be filed

List of Resolution for which MGT-14 requires to be filed.

We have listed Resolutions in 3 Categories, for which Form MGT-14 is required to be filed with ROC-

1. Board Resolutions – Annexure A
2. Special Resolutions- Annexure B
3. Ordinary Resolutions- Annexure C

The list is updated after considering the recent exemption / relaxation provided to by notifications dated 05.06.2015 to Government Companies, Private Companies, Nidhi Companies and Companies registered under Section 8 of the Companies Act, 2013 (Act).

ANNEXURE- A- LIST OF BOARD RESOLUTION REQUIRED TO BE FILE WITH ROC IN FORM MGT-14 BY COMPANY OTHER THEN “PRIVATE LIMITED COMPANY”



S. No. PARTICULARS
A To issue securities, including debentures, whether in or outside India. (In case of shares issue of security means issue of Letter of Offer).
B To Borrow Monies. Borrow Money from any sources (including Director)
C To invest the funds of the Company. (Also follow provisions of Section 186)
D To grant loans or give guarantee or provide security in respect of loans. (Also follow provisions of Section 186)
E To approve financial statement and the Board’s report.
F To appoint internal auditors.
G To appoint Secretarial Auditor.
H To appoint or remove key managerial personnel (KMP). KMP includes (MD, WTD, CEO, CFO & CS)
I To make Political Contributions.
J To make calls on shareholders in respect of money unpaid on their shares.
K To authorize buy-back of securities under section 68.
L To Diversify the business of the company.
M To approve Amalgamation, Merger or Reconstruction.
N Take over a company or Acquire a controlling or substantial stake in another company.

PRIVATE COMPANIES are now exempt from filing resolutions listed in Section 179(3) and Rule 8 of Chapter XII Rules. Hence private companies will no longer be required to file MGT-14 for prescribed matters taken up at its Board Meetings.

ANNEXURE-B- LIST OF SPECIAL RESOLUTION REQUIRED TO BE FILE WITH ROC IN FORM MGT-14



S. NO. SECTION / RULE PARTICULARS
A Section - 8 For a company registered under Section- 8 to convert itself into a company of any other kind or alteration of its Memorandum or Articles.
B Section - 12 Change of location of registered office in the same State outside the local limits of the city, town or village where it is situated.
C Section - 13 Change of registered office from the jurisdiction of one Registrar to that of another Registrar in the same State.
D Section - 14 Amendment of Articles of a private company for entrenchment of any provisions. (To be agreed to by all members in a private company).
E Section - 14 Amendment of Articles of a public company for entrenchment of any Provisions.
F Section - 13 Change in name of the company to be approved by special resolution.
G Section - 13(8) A company, which has raised money from public through Prospectus and still has any unutilized amount out of the money so raised, shall not Change its objects for which it raised the money through prospectus unless a special resolution is passed by the company.
H Section - 27(1) A company shall not, at any time, vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, except subject to the approval of, or except subject to an authority given by the company in general meeting by way of special resolution.
I Section - 271(A) A company may, after passing a special resolution in its general meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed. (Section still not applicable).
J Section - 48(1) Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class.
K Section - 62(1)(c) Private offer of securities requires approval of company by special resolution.
L Section - 54 Issue of Sweat Equity Shares.
M Section - 66(1) Reduction of Share Capital.
N Section - 67(3)(b) Special resolution for approving scheme for the purchase of fully-paid shares for the benefit of employees. (EXCEPT PRIVATE LIMITED COMPANY)
O Section - 68(2)(b) Buy Back of Shares.
P Section - 71(1) A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption:
Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting.
Q Section - 94 Keep registers at any other place in India.
R Section - 149(10) Re-appointment of Independent Director.
S Section - 165(2) Subject to the provisions of sub-section (1), the members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as directors.
T Section - 180(a) to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings. (NOT APPLICABLE ON PRIVATE LIMITED COMPANY)
U Section - 180(b) To invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation. (NOT APPLICABLE ON PRIVATE LIMITED COMPANY)
V Section - 180(c) to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company’s bankers in the Ordinary Course of Business. (NOT APPLICABLE ON PRIVATE LIMITED COMPANY)
W Section - 180(d) To remit, or give time for the repayment of, any debt due from a director. (NOT APPLICABLE ON PRIVATE LIMITED COMPANY)
X Section - 185 For approving scheme for giving of loan to MD or WTD.
Y Section - 186 Loan& Investment by company exceeding 60% of paid up share capital or 100% of free reserve.
Z Section - 196 Appointment of a person as Managerial Personnel if, the age of Person is exceeding 70 year.
AA Schedule V Remuneration to Managerial personnel if, profits of company are Inadequate.
BB Section - 271(1)(b) Special Resolution for winding up of the company by Tribunal.
CC Section - 271(1)(b) Special Resolution for winding up of company.
DD Section - 7(1) Chapter-I Conversion of private company into One Person Company.

ANNEXURE- C- LIST OF ORDINARY RESOLUTION

S. NO. SECTION / RULE PARTICULARS
A Section - 16 The company in general meeting shall pass an ordinary resolution for change of name on receipt of direction from the Central.
B Section - 61 A company, if authorized by its Articles, by ordinary resolution, can increase or consolidate its capital or sub-divide or cancel shares not taken up.
C Rule 12(6) Approval of general meeting for issue of bonus shares.
D Section - 73(2) Approval of general meeting for inviting deposits from members.
E Section - 152 Appointment of Director.
F Section - For consideration of accounts and directors report and report of auditors, declaration of dividend, appointment of director on place of who resign.
G Section - 148(3) Remuneration of Cost Auditor shall be fixed by an ordinary resolution at the general meeting.
H Section - 151 Appointment of a Director by small shareholders.
I Section - 152 Appointment of Directors at the first general Meeting.
J Section - 149 Appointment of independent Director.
K Section - 152 Appointment of Director on being proposed by a member or other person with a deposit of rupees one lakh.

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Conversion of Loan Into Share Capital
 & 
Right Issue For Raising Capital


Issue of shares has been an area of concern under the Companies Act, 2013. Conversion of loan into share capital or right issue is a less cumbersome and more practical process for raising capital for small & medium size companies.

Different ways to issue capital as mentioned in Companies Act, 2013 are as hereunder:

i) Right Issue to Equity share capital on pro rata basis u/s 62(1)(a).

ii) Preferential Allotment [To predetermined person(s) including Equity shareholders who agreed to subscribe i.e. “proposed allottee”] for cash or in kind u/s 62(1)(c).

iii) Private Placement by offer letter [To predetermined person(s) including Equity shareholders to whom co offer to subscribe i.e.“proposed offeree”]for cash only i.e .not in kind u/s 42.

iv) Loan or debenture converted into shares u/s 62(3).

Problems if capital is raised u/s 42 or 62(1)c: 

Say, A Company wants to raise, Rs. 5 Lakhs by way of share issue. It faces the following problems:
  • Issue Expenses are high
  • Process to raise is complex and time consuming
Relevant Provisions

When a company proposes to increase its share capital by converting loan into share capital or by issue of equity or preference shares to its existing equity shareholders on pro rata basis, companies (including private limited companies) have to comply with the new procedures & conditions as specified u/s Section 62(1),(2) & (3) of Companies Act 2013 and Companies(Share Capital and Debentures)Rules 201X.

Conversion of Loan into Capital[Sec 62(3)

Sec 62(3) states that, if a company takes a loan on terms that the loan will be converted into share capital & such an option has been approved before raising of loan by a special resolution, subscribed capital can be increased.

Procedure for conversion of loan into shares:
i. Approve terms of loan by passing special resolution before taking of loan & file special resolution in E-Form MGT14 within 30 days.
ii. Convert loan into shares by passing resolution in Board Meeting & File E-form PAS3 for allotment of shares within 30 days.
iii. Issue share certificate by passing Board resolution & file E-form MGT 14 within 30 days for issue of shares. 

The Process of Right Issue

Example: A Pvt. Ltd. is having two members; Mr. & Mrs. A. A company wants to raise Rs. 2 Lakhs by issue of equity shares.  Mr. & Mrs. A do not want to invest further. Mrs. A wants to sell some shares. However, Mr. C wants to invest in the Company.  It is costly & complex to follow preferential allotment provisions. Mr. C purchases 100 shares from Mrs. A. Now, the company has 3 members:  Mr. A, Mrs. A & Mr. C.  Company comes with right issue, the process of which is simple i.e. by calling a Board meeting, without any minimum application amount per applicant, without opening a separate bank a/c, without valuation report & without need to pass SR in general meeting. Mr. A & Mrs. A, renounced the right in favor of C & company is able to raise fund in an efficient manner.

Relevant Provisions

Sec 62. (1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered—

(a) to persons who, at the date of the offer, are holders of equity shares of the company in proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of offersubject to the following conditions, namely:—

(i) the offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined;

(ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favor of any other person; and the notice referred to in clause (i) shall contain a statement of this right;

(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose of them in such manner which is not disadvantageous to the shareholders and the company;

(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be dispatched through registered post or speed post or through electronic mode to all the existing shareholders at least three days before the opening of the issue.

PROCEDURE:

i. Call a Board meeting to approve right issue including “letter of offer”, which shall include right of renunciation also.

ii. Send offer letter by registered post or speed post or electronic mode to all existing members as on the date of offer at least 3 days before the opening of the issue.

iii. Receive acceptance/renunciation/rejection of rights from members to whom offer has been sent /from persons in whose favor right renounced within period of validity of offer, which can be 15 days to 30 days from offer date as specified in offer letter.

iv. Call a Board meeting to approve allotment, issue of share certificate & authorize a director to file E-form PAS 3(Return of Allotment) to ROC  & MGT 14 for issue of share. If company does not receive sufficient money, Board may dispose off shares offered in such a manner which is not dis-advantageous to the shareholders and the company.

v. File E-form MGT 14 for issue of share (Allotment of shares & Issue of share certificate: Refer D below) & PAS 3(Return of Allotment) to ROC for allotment.

vi. Issue share certificate       

MGT14 is not required to be filed for allotment of shares; however, it is required to be filed for issue of shares:

i) As per sec 179(3)(c), the Board of Directors of a company shall exercise the  powers to “issue” securities on behalf of the company by means of resolutions passed at meetings of the Board.

ii) As per sec 117(1)&(3), such resolutions are to be filed to ROC.

iii) It has been decided by a High court that allotment of shares & issue of share are different. A question arises whether resolution for allotment of shares (which leads to increase in share capital) is to be filled or issue of shares certificate is to be filled?

iv) To avoid dispute, it is suggested to pass both resolutions i.e. 

         (a) for allotment of shares as well 
         (b) for  issue of share certificate in same meeting & file with ROC in MGT14.  

Better route to renounce right in favor of member?

As per Letter No. 8/81/56-PR, dated 4 November, 1957, the issue of further shares by a company to its members with the right to renounce them in favor of third parties does not require the issue or registration of a prospectus.  However, there is no such circular under Companies Act, 2013.

Can the Company Issue Partly Paid Up Right Shares?

Yes, it can. There is no restriction to issue only fully paid up shares for right issue. Accordingly, company can plan its fund requirement in future & accordingly, decide calls for issue of partly paid up shares.

Is Separate Bank Account Mandatory?

No, there is no requirement u/s 62 to receive application money in a separate bank account.

Can Company Receive Money in Cash for Right Issue?

Yes, there is no restriction to receive money only by banking channel u/s 62. However, E-form PAS 3 (Return of Allotment) contains such condition inbuilt in such E-form & without accepting such condition; this E-form cannot be filled. In case money is received in cash, it is advised to attach a declaration as optional attachment that company has received the money in cash & there is no such restriction u/s 62. However, it is advised to receive money by banking channel as far as possible.

CONCLUSION & SUGGESTION

Everyone knows that private placement is costly & complex process to raise share capital. In India, more than 70% Private Ltd. companies are small companies. It is neither feasible nor practical for companies including small companies to raise share capital of “small issue size” by private placement. It is advised to exempt issue size upto 5 crores p.a. from the complex & costly procedure of private placement.

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Draft Offer Letter For Right Issue
Regd. Office: _________________________________________

Notice / Letter of offer


To,        

Issue of 2,00,000 equity shares of Rs. 100 each at par aggregating Rs. 200 Lakhs to the equity shares holders on right basis in the ratio of _____ equity shares for every _____ equity shares held on ___________ 201X, pursuant to the Board resolution passed in its meeting held on ______________201X

Dear Shareholder,

You are hereby informed that the Board of Directors has decided to increase the subscribed and paid up capital of the Company by issue of _____________ equity shares of Rs. 100 each by right offer to equity shareholders as on ___________ 201X on proportionate basis and conditions as laid down, inter alia hereunder, in application form and in Board resolution.  
 As a shareholder on the afore mentioned date, being fixed as offer date, we are pleased to inform you that you are entitled to for the “rights shares offer” in reference to details as mentioned in the enclosed application form.  
By Order of the Board
For___________Ltd.

Director  
Date: _______201X
Place:  


Instructions / Terms

1. Shares will be issued only in physical form. 

2. You may accept the offer and apply for the Equity shares offered, either in full or in part by filling accordingly the application form.

3. You may also renounce all or any of the equity shares; you are entitled to in favor of any person. Any renunciation from Resident to Non Resident or vice versa is subject to the requisite permission and the said permission must be attached to the application.

4. You are also eligible to apply for additional equity shares over and above the number of equity shares offered to you provided you have applied for all the shares offered to you without renouncing them in full or in part. However, application for additional shares is subject to sole discretion of Board. Additional equity shares cannot be renounced in favor any person.

5. Application should be made on the printed form provide by the company. 

6. Full amount i.e. Rs. 100/- is payable with application.

7. All account payee local cheques / draft accompanying the application should be drawn in favor of “________________”.

8. Application for accepting the offer/renouncement shall reach at the registered office address of the Company on or before ____________, 201X. 

9. In case your application form completed in all respect is not received on or before ___________________, 201X, your right for applying/renounce the equity shares shall be deemed to be waived and the Board will have absolute power to dispose off such shares in its sole discretion in the best interest of the Company. 

10. Application for total value of Rs. ___________/- or more, applicants’ income tax PAN details and photocopy must be provided along with application.  Applicant(s) who do not have PAN are required to provide a declaration in Form 60/61 prescribed under the I.T. Act along with application. Application without this will be considered incomplete and are liable to be rejected.

11. In case of application under power of attorney or by a body corporate or by a society, a certified true copy of the relevant power of attorney or resolutions or authority to the signatory to make the investment under this offer and to sign the application and a copy of the Memorandum and Articles of Association or bye laws of such body corporate or society should be accompanies by application.

12. The form must be filled in English and in block capital as applicable/appropriate and delete whichever is not applicable.

13. The form found incomplete with regard to any of the particulates required to be given therein and/or which are not compete in conformity with the terms of offer letter are liable to be rejected and money paid in respect thereof will be refunded without interest.

14. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto.

15. The offer shall be valid for …………….. days (a period limiting a time not being less than fifteen days and not exceeding thirty days) from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined.      

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Application form


Name Of Company
Regd. Office


Last date for receipt of application: ____________, 201X
Issue of 2,00,000 equity shares of Rs. 100 each at par aggregating Rs. 200 Lacs to the equity sharesholders on right basis in the ratio of ______equity shares for every _____ equity shares held on ______________, 201X


Date: _________

To,                                                                                                                 
The Board of Directors,
 ___________ Limited,_____

Dear Sir,

Ref.: Notice / offer letter dated____,201X, regarding the decision of Board of Directors in its meeting held on ____,201X to increase the capital by issue of 2,00,000 equity shares of Rs. 100 each by right offer to Shareholders as on book closure date ____,201X.  

1.            I/we hereby accept and apply for allotment of the below mentioned Equity shares in response to the letter of offer dated ____,201X offering the Equity shares to me/us on right basis.

2.            I/we also apply for below mentioned additional equity shares and agree to accept these shares as may be decided by the Board of Directors.

3.            I/we agree to accept the “Equity Shares” allotted to me/us and to hold such shares upon the terms and conditions as laid down by the Board of Directors and subject to the provisions of the Companies Act, 2013, Memorandum & Articles of Association of the Company, and all the applicable laws, rules, and guidelines.

4.            I/we authorize you to place my/our name(s) on the register of members.  

1

Name of the Shareholder(s):  

2
Number of equity shares

3
Number of right share entitled  :

4
Number of additional shares applied for  :

5
Total Number of Shares applied for : 

6
Amount payable with application by a/c payee cheque / DD in favor of the company :
Rs. 100 per shares applied for
7
Payment/local cheque/DD details  :
  

__________                            __________                                        __________
Sole/first applicant                  Second joint applicant                                    Third joint applicant 

Signature(s) as per specimen recorded with the Company        


______________________
Regd. Office: _________________________________________
Form of renunciation
Date: ______________

To,                                                                                                                                        
Board of Directors,
_______________________Limited.  
Dear Sir,
Pursuant to the Notice / offer letter dated ___201X , I/We hereby renounce my/our rights to the _______ Equity Shares in favor of person(s) accepting the same and signing the application form for renouncee(s). I/We have not made any application to the Company for allotment of these equity shares in my/our name(s).  

__________                            __________                                        __________ 
Sole/first applicant                  Second joint applicant                                    Third joint applicant 


Signature(s) as per specimen recorded with the Company      


Application by Renouncee(s) {to be filled in by renouncee(s) only}
Date:_____________
To,                                                                                                                                         
Board of Directors,
______________Limited.  

1.      In terms of letter of offer dated ___201X and pursuant to the form of renunciation signed by the above mentioned shareholder(s), I/We apply for allotment of below mentioned equity shares.

2.      I/we also apply for below mentioned additional equity shares and agree to accept these shares as may be decided by the Board of Directors.

3.      I/we agree to accept the “Equity Shares” allotted to me/us and to hold such shares upon the terms and conditions as laid down by the Board of Directors and subject to the provisions of the Companies Act, 2013, Memorandum & Articles of Association of the Company, and all the applicable laws, rules, and guidelines.

4.      I/we authorize you to place my/our name(s) on the register of members.

1
Name and address of the renouncee(s)      

2
If you are existing Shareholder, please mention folio no.  

3
Number of equity shares accepted  

4
Number of additional equity shares applied by renouncee

5
Total Number of Shares applied for by renouncee  

6
Amount payable with application
Rs. 100 per shares applied for.
7
Payment/cheque/DD details      


 Signature of renouncee(s)
Full name                                                             
Signature
Address of the fist/sole applicant
Sole/first applicant    


Second joint applicant  


Third joint applicant     



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List of Allottees

Name and Address of the allottees (Date of Allotment: ../../….)

Sr. No.
Name and PAN of allottee
Address of the allottee
Number of shares allotted


Equity
Shares
Nominal Value/Share
Total Amount Received (Rs.)
1
2
3
4
5
6
1.





2.





3.







Total





For _____________ Private Limited


Director

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Offer Letter for Rights

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF ……………………… PRIVATE LIMITED HELD ON …………….., 201X AT THE REGISTERED OFFICE OF THE COMPANY SITUATED AT ……………….

The Chairman informed the Board that it was proposed to offer Rights Shares to the existing shareholders of the Company, to meet the capital requirement of the Company, for future expansion and growth. The Chairman further informed the Board that it was proposed to offer ……………… (……………….. only) Equity Shares of `.10/- (Rupees ten only) each, at a premium of `…………./- (Rupees …………….. only) per share to the existing shareholders in proportion to their existing share holding as on date.

Further, the draft Letter of Offer was placed before the Board for its perusal. After a brief discussion, the Board passed the following resolutions:

“RESOLVED THAT pursuant to the provisions of Section 62 of the Companies Act, 2013 and the relevant Rules and Regulations made there under, approval of the Board be and is hereby accorded for offering ……………….. ……………… only) Equity Shares of `………………./- (Rupees ten only) each, at a premium of `………………/- (Rupees ……………. only) per share, to the existing shareholders of the Company, in proportion of their existing holding as on the date.”

“RESOLVED FURTHER THAT the draft Letter of Offer as placed before the Board for offering the above said Rights Shares, be and is hereby approved.”

“RESOLVED FURTHER THAT ………………… or …………, Directors of the Company or Ms. Swati Hegde, Company Secretary of the Company, be and are hereby severally authorized to sign and issue the Letter of Offer to the existing shareholders of the Company and to complete all the procedures with respect to the rights issue and allotment of shares.”

“RESOLVED FURTHER THAT …………….. or Mr. …………., Directors of the Company or Ms. Swati Hegde, Company Secretary of the Company, be and are hereby severally authorized to sign and file necessary e-forms with Registrar of Companies-Karnataka as may be necessary in this regard.”

CERTIFIED TRUE COPY

M/S. …………………….. PRIVATE LIMITED


………………..
DIRECTOR
DIN: …………….

PLACE: ............
DATE…………..

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Allotment of Right Shares

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF WAY2WEALTH BROKERS PRIVATE LIMITED HELD ON …………..TH DAY OF ………………., 201X AT THE REGISTERED OFFICE OF THE COMPANY SITUATED …………………………..

The Chairman informed the Board that `………………/- (Rupees …………….. only) has been received from M/s. …………………. Private Limited, towards the share application money  for subscribing for Rights Equity Shares pursuant to the Letter of Offer dated September .., 201X, along with the share application forms.

After a brief discussion, the Board passed the following resolutions for allotment of Rights Equity Shares:

“RESOLVED FURTHER THAT pursuant to the provisions of Section 62 of the Companies Act, 2013 and the relevant Rules and Regulations made there under, approval of the Board be and is hereby accorded for allotment of ……………………. (……………… only) Rights Equity Shares of  Rs.10/- (Rupees Ten only) each at a premium of Rs……./- (Rupees …………… only) per share, to M/s………………… Private Limited as detailed below. ”

Name of Subscriber
No. of shares
Dist.  Nos.
Nominal Value (Including Premium)
Certificate No.
Folio No


From
To
Rs.










 “RESOLVED FURTHER THAT the Share Certificate consisting of ……….. New Equity Shares be issued in favor of M/s ……….. and the share certificates be signed by …………………, Directors of the Company and be countersigned by …………….., Company Secretary of the Company under the Common Seal of the Company.”


“RESOLVED FURTHER THAT …………. or …………, Directors of the Company be and is hereby severally authorized to sign and file necessary e-forms with Registrar of Companies-Karnataka, and further authorized to do all such acts, things, deeds, matters as may be necessary and incidental thereto to give effect to the above resolutions.”


CERTIFIED TRUE COPY

M/S. ………………. PRIVATE LIMITED


…………
DIRECTOR
DIN: 

PLACE: BANGALORE
DATE: ………….


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LETTER OF OFFER
Date: ../../…. 

To,
The Shareholders of ……………………………… Private Limited
               
                                                                                                                                                       
Dear Shareholder,
Sub: Offer of ………. Equity Shares of Rs. 10/- each at a premium of Rs…../- per share aggregating to Rs…………../-, on right basis
1. Pursuant to the resolution passed at the meeting of the Board of Directors of the Company on …………………..., the Board is pleased to make an offer of …………… Equity shares of a face value of Rs.10/- (Rupees Ten only) for cash at a premium of ………. per share aggregating to Rs………………./- (…………….),  to the existing equity Shareholders of the Company, on Right basis.

2. The above Rights offer is being made in proportion to the present share holding in existing paid up capital of the Company by each Shareholder of the Company, subject to rounding off. 

3. The above mentioned shares are being offered to those Shareholders whose name appears in the Register of members of the Company as on September …., 201X being the record date fixed by the Board of Directors. 

4. Out of the above, you are entitled for the number of Equity shares as mentioned in the application form attached herewith. 

5. This Rights Issue will be kept open for 15 days from September .., 201X to September .., 201X (inclusive of both the days) till the close of the working hours, and you may accept or decline the offer on or before the closure of the offer.

6. This issue includes a right exercisable by you to renounce the Shares offered to you either in full or in part in favor of any other existing Shareholder of the Company and the right to renounce the shares offered to you can be exercised on or before September .., 201X.

7. The object of the issue is to meet the capital requirement of the Company for business expansion and growth.

8. You may also apply for additional equity shares over and above the number of Equity Shares which you are entitled to provided allotment of additional equity shares will be considered for unsubscribed portion, if any, as per the discretion of the Board of Directors of the Company. 

Yours truly,

 For ……………. Private Limited

……………….
Director
DIN: ……….

Important notes & Instructions

1. The present issue is pursuant to Sections 62 (1) and other applicable provisions of the Companies Act, 2013 read with the relevant Rules and Regulations made there under and, Memorandum and Articles of Association of the Company, Application Form and other terms and conditions of the allotment.

2. This Rights issue is exclusively for the existing Shareholder of the Company. This may not be treated as an invitation for private placement or preferential issue.

3. Basis of allotment will be to those shareholders who have applied for their rights entitlement either in full or in part and also to the renouncee(s) who has/have applied for Shares renounced in their favor in full or in part and those shareholders who have also applied for additional equity shares, provided there is an under-subscribed portion after making full allotment(s) above. 

4. The unsubscribed portion of the above right issue, if any or any fraction thereof shall be disposed off as per the discretion of the Board of Directors of the Company as deem fit in the best interest of the Company. 

5. All applications should be made on the prescribed Application Form. Applications which are not complete in all respect or are made otherwise than as per the instructions or are not accompanied by application money payable in respect  thereof will be rejected and application money, if any, will be refunded without interest.

6. Period of Subscription: The subscription list for the issue shall remain open from September .., 201X to September .., 201X. 

7. Payment Instructions: The application form along with the application money by Cheque/Pay Order/ Demand Draft, crossed account payee only should be submitted to the Company. The Cheque/Pay Order/Demand draft should be made payable in favor of “Way2Wealth Brokers Private Limited”, payable at Bangalore.

The applicant may also remit the application money to the Company’s Bank Account as detailed below, within the closure of the issue date and details of such remittance shall be mentioned in the Application Form as may be required there in and shall be submitted to the Company within the closure of the issue date.

Name: …………………..
Bank Name: ………………..
Branch:
Account No.: ……………….
IFSC:

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This blog is Created by CA Anil Kumar Jain.