What is the procedure to Right Issue of Shares under Companies Act 2013?

What is the procedure to Right Issue of Shares under Companies Act 2013? 

In accordance with the provisions of clause (a) sub-section (1) of Section 62, 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 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 offer.

Key Considerations:

  • Right issue means offer of shares to the equity shareholders of the Company, as on the date of offer, in proportion to the capital paid up on their shares. (Section 62(1)(a)
  • Shares shall be offered on rights basis by sending a letter of offer fulfilling the prescribed conditions. (Section 62(1)(a)
  • Unless the articles of the company otherwise provide, the offer of rights issue shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person.
  • Board Resolution for considering the issue of shares on rights basis cannot be passed by circulation. (S.179 (3)(c).

The following procedure is to be followed for Rights Issue of Shares by a Company under Section 62:- Read Here

What is the procedure to Right Issue of Shares under Companies Act 2013?

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