Share Allotment
Quick Answer
Share Allotment India is the process by which a company issues new shares to investors or existing shareholders, increasing its share capital. Governed by the Companies Act, 2013, this procedure is essential for business changes such as raising funds, expanding operations, or restructuring ownership.
Share Allotment — detailed explanation below
Governing Act — Share Allotment India
The primary legislation governing share allotment in India is the Companies Act, 2013. Key provisions include Section 23 (public offer and private placement), Section 39 (allotment of shares by a company), and Section 62 (further issue of share capital). Additionally, the Companies (Prospectus and Allotment of Securities) Rules, 2014 prescribe detailed procedures for allotment.
Government Department & Website for Share Allotment India
The Ministry of Corporate Affairs (MCA) is the government department responsible for regulating share allotment. Filings are made through the MCA21 portal at www.mca.gov.in. The Registrar of Companies (ROC) in the respective state jurisdiction oversees the allotment process.
Share Allotment India Application Process
The process for share allotment in India involves several steps:
- Board Resolution: The board of directors passes a resolution approving the allotment and determining the number of shares, price, and allottees.
- Filing of Return of Allotment: Within 30 days of allotment, the company must file Form PAS-3 (Return of Allotment) with the ROC, along with the list of allottees and details of consideration.
- Issue of Share Certificates: Share certificates must be issued within 2 months of allotment for private companies and 6 weeks for public companies.
- Update Register of Members: The company must update its register of members with the new shareholdings.
For private placement, additional requirements under Section 42 apply, including filing of Form PAS-4 and maintaining records of offers.
Key Forms Required for Share Allotment India
The following forms are commonly required for share allotment in India:
- Form PAS-3: Return of Allotment – filed with ROC within 30 days of allotment.
- Form PAS-4: Private Placement Offer Letter – required for private placement.
- Form MGT-14: Filing of board resolution for allotment (if applicable).
- Form SH-1: Share Certificate – issued to allottees.
All forms are filed electronically on the MCA21 portal.
Eligibility Criteria for Share Allotment India
Any company incorporated under the Companies Act can allot shares, subject to the following conditions:
- The company must have an authorized share capital sufficient to cover the new shares.
- The allotment must be approved by the board of directors (and shareholders if required by the articles).
- For private placement, the offer must be made to a maximum of 200 persons in a financial year (excluding qualified institutional buyers).
- The company must not be prohibited by any court order or regulatory direction.
Timeline for Share Allotment India
The timeline for share allotment in India depends on the type of allotment. For a standard allotment, the board resolution is passed, and the return of allotment must be filed within 30 days. Share certificates are issued within 2 months for private companies. For private placement, additional steps such as filing of offer letter and record of allotment may extend the process. No specific timeline is prescribed by law beyond these statutory deadlines.
Fees for Share Allotment India
The fees for share allotment in India are prescribed by the Ministry of Corporate Affairs and vary based on the nominal share capital of the company. Below is a table of government fees for filing Form PAS-3:
| Nominal Share Capital (₹) | Fee (₹) |
|---|---|
| Up to 1,00,000 | 200 |
| 1,00,001 to 5,00,000 | 300 |
| 5,00,001 to 10,00,000 | 500 |
| 10,00,001 to 25,00,000 | 1,000 |
| Above 25,00,000 | 2,000 |
Additional fees may apply for late filing or other forms. These fees are subject to change as per MCA notifications.
Frequently Asked Questions
What is share allotment in India?
Share allotment in India is the process by which a company issues new shares to investors or existing shareholders, increasing its share capital. It is governed by the Companies Act, 2013 and requires compliance with filing and documentation requirements.
What are the key documents required for share allotment India?
Key documents include a board resolution approving the allotment, Form PAS-3 (Return of Allotment), share certificates, and updated register of members. For private placement, Form PAS-4 (offer letter) is also required.
How long does share allotment India take?
The statutory timeline requires filing Form PAS-3 within 30 days of allotment and issuing share certificates within 2 months for private companies. The overall process can be completed within a few weeks if all documents are in order.
What is the fee for share allotment India?
The government fee for filing Form PAS-3 ranges from ₹200 to ₹2,000 depending on the company's nominal share capital. Additional fees may apply for late filing or other forms.
Can a private company allot shares to non-residents?
Yes, a private company can allot shares to non-residents, subject to compliance with the Foreign Exchange Management Act (FEMA) and pricing guidelines. The company must also file Form FC-GPR with the Reserve Bank of India.
What is the difference between share allotment and share transfer?
Share allotment involves issuing new shares by the company, increasing its share capital. Share transfer involves the transfer of existing shares from one shareholder to another, without changing the company's capital.
Is board resolution required for share allotment India?
Yes, a board resolution is mandatory for share allotment. The resolution must specify the number of shares, price, and allottees. It must be filed with the ROC if required by the company's articles.
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