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FURTHER ISSUE OF CAPITAL. Chapter IV Section 62 (1-4) & Rule 12 & 13 Companies Act 2013. Further Issue / Allotment can be made to…….. . Existing Share Holders . Issue of employee stock options . Issue of Shares on preferential basis . In proportion to their existing share holding.

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further issue of capital


Chapter IV

Section 62 (1-4) &

Rule 12 & 13

Companies Act 2013


Further Issue / Allotment can be made to……..

Existing Share Holders

Issue of employee stock options

Issue of Shares on preferential basis

In proportion to their existing share holding

To employees under a scheme of employees’ stock option

& Subject to Rule-12

& Special Resolution

To any other person

& Subject to Rule 13

& Comply Section 42


Issue of shares to

    • Employees i.e ESOP &
    • Directors as Sweat Equity Shares
    • Bonus Issue / Right Isse to existing share holders

Will be dealt separately under the respective provisions of the Act

Return of allotment in Form No. PAS- 3 needs to be submitted


Further Issue / Allotment to Existing Share Holders in proportion to their existing share holding……………

  • Send Letter of Offer / Notice **
  • Offeree can renounce his right

Specifying Time Limit

Not Less than 15 days & Not more than 30 days

If offer is not accepted

It is deemed that it is decline

After expiry of Specified Time Limit

  • Or if offeree declines the offer

Board of Directors may dispose of them in such manner which is not dis-advantageous to the shareholders and the company

** Notice can be sent by Registered post / Speed post / Electronic Mode

rule 12 section 62 1 b issue of employee stock options
Rule 12 Section 62 (1) (b). Issue of employee stock options
  • Eligibility Criteria

working in India or outside India

  • Permanent Employee
  • Director

Of Subsidiary / Holding / Associate Company working in India / out side India

Excluding Independent Director

Exclude Following

  • an employee who is a promoter or a person belonging to the promoter group
  • a director directly or indirectly, holdsmore than 10% of the outstanding equity shares

Brief Conditions of Rule for ESOP

  • Special Resolution by share holders
  • Approval by separate Resolution for
  • - Grant of option to employees of subsidiary /holding company
  • - Grant of option to Identified Employees equal to / exceeding 1% of issued capital
  • Variation in terms – Special Resolution required
  • The company shall have the freedom to specify the lock-in period
  • Rights Restricted - to receive dividend / to vote or / enjoy the benefits of a shareholder in respect of option granted to them --- till shares are issued on exercise of option
  • The option granted to employees shall not be transferable
  • Maintain Register of Employee Stock Options in Form No. SH.6
  • Disclosure in Directors Report

Rule 13. Section 62 (1) (C) Issue of shares on Preferential Basis

Issue on preferential basis should also comply with conditions laid down

in section 42 of the Act

  • Brief Conditions –
  • authorized by its Articles of Association
  • Special Resolution passed in a general meeting
  • For cash or for consideration other than cash --- valuation report of a registered valuer giving justification for valuation
  • Securities allotted by way of preferential offer shall be made fully paid up at the time of their allotment
  • The allotment shall be completed within a period of 12 months
  • - If Not completed within 12 month --- ANOTHER SPECIAL RESOLUTIONwill require to complete allotment