Share Issuance and Allotment

Share Issuance and Allotment

    About Service
When the company is first incorporated, a number of shares is usually issued. There are a number of factors affecting it. This share issue, along with any money that the company may borrow, enables the company to trade. The initial shareholders are often referred to as ‘subscribers’, because they are said to subscribe to the company’s Memorandum of Association (MOA). Allotments of shares means acceptance by the company of the offer made by the applicants to take up the shares applied for. The information of allotment is given to the shareholders by a letter known as ‘Allotment Letter’. It is on allotment that share come into existence. A company can issue shares in two ways, either on cash or for consideration other than cash.
 Timeline: 3-7 Working days
 Package Inclusions
  • Form PAS -3 (return of allotment) in 30 days of allotment of shares
  • Content for resolution
  • Format for list of allotees
 Documents Required
  • Offer Letter
  • Capital structure before & after issuance of security
  • Dividend for last 3 years
  • Summary of financial position including Cash Flows – last 3 years – audited
  • Change in accounting policies in last 3 years and its effect on profits & Reserves
  • Declaration by director of compliance
  • Form PAS -3 (return of allotment) in 30 days of allotment of shares
  • Resolution and list of allottees
  • PAN & e-mail address, of each member to whom share allotted, in the list of allottees.
 Process Details
  • Offer letter
  • financial disclosures
  • Application money
  • Compliance requirement for allotment by filing of forms
 Key Advantages
  • Share issue, along with any money that the company may borrow, enables the company to trade. Allotments of shares means acceptance by the company of the offer made by the applicants to take up the shares applied for. The information of allotment is given to the shareholders by Allotment Letter. A company can issue shares in two ways, either on cash or for consideration other than cash.
 FAQs
  1. What are the different kinds of issue?
    Issues are of three kinds public, rights or preferential issues (also known as private placements).
  2. What is initial public offering?
    Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuer’s securities.
  3. What is private placement?
    A private placement is an issue of shares or of convertible securities by a company to a select group of persons. This is a faster way for a company to raise equity capital.
  4. What is share allotment letter?
    Allotment letter is a document that details and confirms the amount or number of securities allotted to an applicant for a new issue or a rights issue.
  5. What is rights issue?
    Rights Issue (RI) is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date. The rights are normally offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for companies who would like to raise capital without diluting stake of its existing shareholders unless they do not intend to subscribe to their entitlements.

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