Allotment of Shares - Issue New Shares and File the Return of Allotment

They describe the same event from two sides. 'Issue of shares' is the company's act of creating and offering new shares; 'allotment of shares' is the act of formally assigning those shares to specific people. In practice, the terms are used interchangeably.

Allotment creates new shares and increases the company's total issued share capital. A transfer simply moves existing shares from one shareholder to another - no new shares are created and total issued capital does not change.

Form PAS-3 is the Return of Allotment filed with the ROC after a company allots shares. It must be filed within 30 days of the allotment date, along with the list of allottees and the relevant board or special resolution.

Late filing attracts additional government fees calculated on a sliding scale based on the delay, in addition to the normal filing fee. Persistent non-filing can also invite ROC scrutiny and penalties under Section 39(5) of the Companies Act, 2013.

Private placement is an offer of shares to a select group of identified investors - not exceeding 200 persons in a financial year, excluding qualified institutional buyers and ESOP allottees - made through a formal offer letter in Form PAS-4, with application money held in a separate bank account until allotment.

Form PAS-4 is the private placement offer letter that must be issued to each identified allottee before accepting their application money. It sets out the terms of the offer and is filed with the ROC along with Form PAS-3 after allotment.

For private placement under Section 42, no - the money must sit in a separate bank account and cannot be used by the company for any purpose until the shares are actually allotted. Using it earlier is a compliance breach.

A rights issue offers new shares to existing shareholders in proportion to their current holding, giving them the first opportunity to maintain their percentage ownership before shares are offered to anyone else, under Section 62(1)(a).

A bonus issue converts a company's free reserves or securities premium into new shares that are given to existing shareholders free of cost, in proportion to their existing holding, under Section 63 of the Companies Act, 2013.

Preferential allotment is the issue of shares to specific identified persons - often new investors in a funding round - on a basis other than a rights issue, typically requiring a special resolution, a valuation report, and adherence to Section 42 procedure when shares are issued for cash.

No. The total issued share capital after allotment cannot exceed the authorised share capital stated in the company's Memorandum of Association. If there isn't enough headroom, the company must first increase authorised capital by filing Form SH-7.

Within 2 months of the date of allotment, as required under Section 56(4) of the Companies Act, 2013. The company's register of members should also be updated at this time.

A valuation report from a registered valuer is typically required for preferential allotment (especially when shares are issued at a premium) and for private placement in specific circumstances, to establish that the issue price is fair.

Up to 200 persons in a financial year, excluding qualified institutional buyers and employees who are allotted shares under an ESOP. Exceeding this limit without following public offer requirements risks the issue being treated as a public offer.

Not always - a straightforward rights issue can often be approved by the board alone. Private placement and preferential allotment, however, require a special resolution passed by shareholders holding at least 75% of voting rights.

Stamp duty applies to share certificates issued on allotment, as per the applicable rate under the Indian Stamp Act and the relevant state's stamp duty rules. We factor this into the paperwork when issuing certificates.