Draft Documents For Right Issue

Steps to be followed in case of a Rights Offer under Companies Act, 2013

1 Check whether the Rights Issue results in increase of authorized capital, otherwise, follow the required procedure to amend the same.


2 Convene a Board meeting to pass resolutions relating to the following matters:

i. Considerations of the offer of rights shares and the proportion in which the share are to be issued
ii. Fixing a record date, if required
iii. Approval of the draft letter of offer* to be sent to the shareholders, which shall include right of renunciation also.

3 Circulate letter of offer 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. (for a private limited company, the period may be lesser than 3 days)

4 Offer shall be open for a period not less than 15 (fifteen) days or not more than 30 (Thirty) days from the date of offer. (for a private limited company, the offer period specified may be of lesser duration)

5 Receive acceptance/renunciations/rejection of rights from the members to whom offer has
been sent & also from persons in whose favour right renounced.

6 Convene a Board meeting to pass resolutions relating to the following matters:

a] Take note of applications received and rejected against the offer
b] Approve allottment of rights shares against the application received (to be allotted within
60 days of receipt of application money)
c] Issue rights shares to the allottees
d] Authorization to file PAS 3 (Return of Allotment) & MGT-14 (Issue of shares) to ROC within 30 days of allotment
e] Dispose the rights shares declined to be accepted, if any

7 File Return of allotment within 30 days of allotment in Form PAS-3 in the prescribed manner.

8 File Intimation for issue of Rights Shares within 30 days of allotment in Form MGT-14 (not applicable for private limited companies) in the prescribed manner.


9 Deliver duly stamped Share Certificates in form SH-1 to the allottees within 2 months from the date of allotment of rights shares.

10 Make entry of allotment of shares allotted against rights offer in the Register of Members maintained in Form No. MGT-1. (Section 88 and the Companies (Management and Administration) Rules, 2014)

11 Where the securities are dealt with in a depository, intimate the details of allotment of shares to the Depository immediately on allotment of such shares.

12 In case of listed companies, follow the conditions prescribed under Chapter IV of SEBI (ICDR) Regulations , 2009 and Listing Agreement.

DRAFT FORMAT


Board Resolution For Offer Letter for Rights Issue

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CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF ……………………… PRIVATE LIMITED HELD ON …………….., 2014 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 Rs. 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 Mr./Ms. _______________, 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 Mr./Ms. _____________, 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…………..

Board Resolution For Allotment of Rights Share

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CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF ______________ PRIVATE LIMITED HELD ON …………..^TH DAY OF ………………., 2014 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 __________ ___, 2016, 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 `.10/- (Rupees Ten only) each at a premium of `……./- (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

“RESOLVED FURTHER THAT the Share Certificate consisting of ……….. New Equity Shares be issued in favour 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 : ............

DATE: ………….

LETTER OF OFFER FORMAT 1

SELECT AS PER YOUR PREFERENCE.

Date: __________

To,

The Share holders of ……………………………… Private Limited

               

                                                                                                

 

Sub: Offer of ………. Equity Shares of  Rs. 10/- each at a premium of  Rs. ……/- per share aggregating to Rs. …………../-, on Right basis

 

 Dear Share holder,

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 Rs. ………./- per share aggregating to Rs,………………./- (…………….only), to the existing equity share holders 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 share holder of the Company, subject to rounding off.

3. The above mentioned shares are being offered to those share holders whose name appears in the Register of members of the Company as on_______  __, 2016 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 _________ __, 2016 to ___________ __, 2016 (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 favour of any other existing share holder of the Company and the right to renounce the shares offered to you can be exercised on or before ______ ___, 2016.

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 share holder 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 favour 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 _______ __, 2016 to __________ __, 2016.

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 favour of “__________________ Private Limited”, payable at _______.

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: .............

LETTER OF OFFER FORMAT 2

………………

For the existing Equity Shareholders of the Company only

(NAME OF THE COMPANY)

Registered Office: ………………………………………

Tel: ………………………

                                                   Email: ……………. 
                                                  Contact person: ……………………..

Dear Eligible Equity Shareholder(s),

Pursuant to the resolution passed by the Directors of the Company at a Board Meeting held on ………………, it has been decided to make the following offer to the existing Equity Shareholders of the Company:

 

ISSUE OF …………. EQUITY SHARES OF FACE VALUE OF Rs…… EACH, FOR CASH AT A PREMIUM OF Rs……. PER SHARE AGGREGATING TO Rs………… PER SHARE BY ………………….., (“THE COMPANY” OR “THE ISSUER”) TO THE ELIGIBLE EQUITY SHAREHOLDERS OF THE COMPANY ON RIGHTS BASIS IN THE RATIO OF

……… EQUITY SHARE FOR EVERY …….. EQUITY SHARES HELD AS ON ……….., THE RECORD DATE, i.e. [..:.. ]. THE ISSUE PRICE OF EACH EQUITY SHARE IS Rs…… PER SHARE.

RIGHTS ISSUE SUMMARY

Equity Shares being offered by the Company
Entitlements for Rights Equity Shares
Record Date
Face Value Per Equity Share
Issue Price Per Equity Share
Equity Shares Outstanding prior to the Issue
Equity Shares Outstanding after the Issue
Issue Opening Date
Issue Closing Date
Terms of the Issue

OBJECTS OF THE RIGHTS ISSUE

The management of the Company is of the opinion that for increasing the operations of the Company there is a need of capital contribution from the existing equity shareholders of the Company aggregating to a sum of about Rs…………(Rupees ………………).


It is being proposed to raise the aforesaid sum of money by way of an equity rights issue from the existing equity shareholders of the Company. The details of the proposed issue is contained in the foregoing paragraphs of this letter of offer.

 

GENERAL INFORMATION

  
Corporate Identification Number: ……………….
Registered Office of the Company:
…………………….
………………….
Tel:………………….
Email:………………





Statutory Auditor of the Company:
 
……………………………
Chartered Accountants
……………………….
Tel: 91…………………
Fax: 91…………….
Email: ……………………….
Firm Registration No.:…………..
Contact Person: ……………………..
Membership No.:……………….

Bankers of the Company:
 
……………………

List of Allottee

Name and Address of the Allottes (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.	____________Private Limited PAN:____________	______________, City : _________ Pin Code : ______ State : ________	_______	10	_______
2.	_________ Limited PAN:________	______________, City : _________ Pin Code : ______ State : ________	_______	10	_______
3.	KN Metals Private Limited PAN:AADCK1274C	______________, City : _________ Pin Code : ______ State : ________	_______	10	_______
		Total	_______	10	_______

For _______________ Private Limited

Director

FINANCIAL SUMMARY

The following tables set forth the Company‘s summary of Balance Sheet and Profit & Loss Account based on the Company‘s audited financial statements for the twelve months period ended March 31, ………… & March 31, ………. on which the Auditor has issued the audit reports.

 

Particulars	20.. - .. (Rs.)	20..- .. (Rs.)
Year’s working resulted in surplus of
Less: Provision for taxation
Less: Income tax of earlier years
Profit After Tax
Add/(Less): Profit/(Loss) Brought Forward
Balance being Profit/(Loss) carried to Balance
Sheet

DIRECTORS OF THE COMPANY

	Sl No	Name of the Director		Designation
1				Director
2				Director

CAPITAL STRUCTURE

Details as on the date of this Letter of offer	Aggregate Value at Face Value (Rs.)	Aggregate Value at Issue Price (Rs.)
Authorised Capital
…………… Equity Shares of Rs…. each
……………. Preference Shares of Rs….each
Issued, Subscribed & Paid Up
………… Equity Shares of Rs…. each
Present Rights Equity Issue
……………. Equity Shares of Rs…. each
Post Issue Capital
……….. Equity Shares
Share Premium Account
Before the Offer
After the Offer

TERMS OF THE ISSUE

The Equity Shares, now being issued, are subject to the terms and conditions contained in this Letter of Offer, the enclosed Common Application Form (“CAF”) & the provisions of the

Companies Act, 2013.

Authority for the Issue

The Directors of the Company, vide a resolution passed at its Board Meeting of ……………

have authorized & approved this Issue.

Ranking of Equity Shares

The Equity Shares being allotted pursuant to this issue shall rank pari passu with the existing Equity Shares in all respects including dividend.

Basis for the Issue

The Equity Shares are being offered for subscription for cash to the Eligible Equity

Shareholders whose names appear as registered holders in the register of members of the Company as on the Record Date i.e. …………...

Fractional Entitlement

Fractional entitlement of ….. and above will be rounded off to the next higher integer. Any fractional entitlement of less than …….. shall be ignored.

Rights Entitlement

Equity Shareholders whose name appears in the Register of Members of the Company on the Record Date will be entitled to the number of Equity Shares (after making suitable adjustment for fractional entitlement) shown in the enclosed CAF (Common Application Form). The Eligible Equity Shareholders are entitled to .. (……) Equity Share for every .. (…..) Equity Shares held on the Record Date.

Additional Shares

Eligible shareholders shall also have an option to apply for additional shares, provided all the entitled shares has been applied for. The total entitlement and additional shares opted by a shareholder shall not exceed the total number of shares available for allotment in this right issue.

Principal Terms of the Equity Shares

Face value: Each Equity Share shall have a face value of Rs……….

Issue Price: Each Equity Share is being offered at a price of Rs…………….

Payment terms: All shareholders shall have to make the full payment of the Issue Price at the time of making an Application.

Joint Holders

Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as such with the benefit of survivorship subject to the provisions contained in the Articles.

Nomination

In accordance with Section 72 of the Companies Act, 2013 only individuals applying as sole applicants/joint applicants can nominate in the manner prescribed. Non-individuals including society, trust, body corporate, partnership firm, holder of power of attorney cannot nominate. The sole or first holder, along with other joint holders, may nominate any one person in whom, in the event of the death of sole holder or in case of joint holders, death of all the holders, as the case may be, the Equity Shares allotted, if any, shall vest.

A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 72 of the Companies Act, 2013 be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale/ transfer/ alienation of equity share(s) by the person nominating. 

A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the prescribed form available on request at our Company’s Registered Office. The Applicant can make the nomination by filling in the relevant portion of the CAF.
 

Utilization of Issue Proceeds

The funds received against this Issue will be kept in a separate bank account and the Company shall utilize the funds collected in the Rights Issue only after the basis of allotment is finalized.

Renunciation

This right offer includes the right to renounce the shares by the offeree in favour of any other person.

Common Application Form (CAF)

All Eligible Equity Shareholder shall be sent a CAF along with this letter of offer to enable them to exercise their option to subscribe to the rights issue of the Company. Any such shareholder who has neither received the original CAF may obtain the duplicate CAF from the contact person of the Company as mentioned in the first page of this document. The CAF

should be dully filled and signed in by the shareholder/(s) concerned along with a cheque/pay order/demand draft, which should be drawn in favour of “……………………” and should send the same to the Registered office of the Company. The envelope enclosing the CAF should be super scribed “………. – Rights Issue, 20..”.

Last date of Application

The last date for submission of the duly filled in CAF is ………………….. If the CAF together with the amount payable is not received by the Company on or before the close of banking hours on the aforesaid last date, the offer contained in this Letter of Offer shall be deemed to have been declined.

Basis of Allotment

Subject to the provisions contained in the Letter of Offer, the Board will proceed to allot the Equity Shares in the following order of priority:

1. Full allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full or in part.

2. Full allotment of the shares renounced in the name of renouncees, if any.

3. Allotment to the Equity Shareholders who have applied for all the Equity Shares offered to them as part of the Issue and have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full allotment in (a) and (b) above. Further, the unsubscribed portion of the rights issue, if any shall be allotted to the shareholder/(s) who have opted for additional shares. In case the total additional shares request received from multiple shareholder/(s) exceeds the total number of shares available for allotment in this rights issue, the additional shares will be allotted pro-rata to such applicants requesting for additional shares. In the event of oversubscription, Allotment will be made within the overall size of the Issue. In the event of undersubscription, the unsubscribed portion shall stand cancelled.

The allotment of Equity Shares under this issue shall be completed within a period of ___

days from the date of closure of the Issue.

Allotment/Refund/Share Certificate

The Company will issue and dispatch letter of allotment / share certificates / and / or letters of regret along with refund orders if any, within a period of ………… (….) days from the Issue

Closing Date to the registered address of the relevant first holder.

General instructions for Subscribing Shareholders

1. Please read the instructions printed on the enclosed CAF carefully.

2. Applications should be made on the enclosed CAF provided by the Company and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and / or which are not completed in conformity with the terms of the Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of
   bank commission and other charges, if any. The CAF must be filled inEnglish and the names of all the Investors, details of occupation, address, father’s / husband’s name must be filled in block letters. If any portion of the CAF is / are detached or separated, such application is liable to be rejected.

3. Applications for any value made by the Investor, or in the case of joint names, each of the joint Investors, should mention his / her Permanent Account Number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.

3. All payments should be made by Cheque /PO /DD only. Cash payment is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

3. The Eligible Equity Shareholders must sign the CAF as per the specimen signature recorded with our Company.

3. In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with our Company. In case of joint applicants, reference, if any, will be made in the first Investor’s name and all communication will be addressed to the first Investor.

General instructions in case of renouncement

1. The Eligible Equity Shareholders renouncing the right shall address a letter to the Company mentioning the name, address, PAN and contact details of the renouncee (person in whose favour renouncement is being done).

2. The said letter shall be handed over to the renouncee concerned, who shall attach the same with the CAF.

3. The renouncee shall not be entitled to apply for additional shares.

DECLARATION

All the relevant provisions of the Companies Act, 2013, and other applicable laws have been complied with and no statement made in this Letter of Offer is contrary to the provisions of the Companies Act, or rules made there under or guidelines issued. We further certify that all statements in this Letter of Offer are true and correct.

By the Order of the Board of Directors of ………………….

(Name of the Director)

Director

Place: …………….

Date: …………….

Thanks & Regards,

Meetesh Shiroya