Explain the procedure of allotment of shares.
Find the question and answer of Company Law only on Legal Bites.
Question: Explain the procedure of allotment of shares.Find the question and answer of Company Law only on Legal Bites. [Explain the procedure of allotment of shares.]AnswerThe allotment of shares is the process by which a company issues new shares to investors or existing shareholders. The procedure for the allotment of shares is governed by the Companies Act 2013 and the rules made thereunder. The following is a brief explanation of the procedure for the allotment of shares under...
Question: Explain the procedure of allotment of shares.
Find the question and answer of Company Law only on Legal Bites. [Explain the procedure of allotment of shares.]
Answer
The allotment of shares is the process by which a company issues new shares to investors or existing shareholders. The procedure for the allotment of shares is governed by the Companies Act 2013 and the rules made thereunder. The following is a brief explanation of the procedure for the allotment of shares under the Companies Act 2013:
Issue of Prospectus or Offer Letter: Before the allotment of shares, the company must issue a prospectus or offer letter inviting applications for the shares. The prospectus or offer letter must contain all the relevant details of the shares, such as the number of shares, the price, the terms and conditions of the issue, and the procedure for making the application.
Receipt of Application: The company must receive the applications for shares within the time specified in the prospectus or offer letter. The application must be made in the prescribed form, and the application money must be deposited with the company.
Allotment of Shares: After the receipt of applications, the company must make an allotment of shares. The allotment must be made in accordance with the terms and conditions of the prospectus or offer letter. The allotment can be made either on a first-come-first-served basis or through a lottery system.
Filing of Return of Allotment: After the allotment of shares, the company must file a return of allotment with the Registrar of Companies within 30 days of the allotment. The return must contain the details of the allotment, such as the names and addresses of the allottees, the number of shares allotted, and the amount paid for the shares.
Issue of Share Certificates: After the filing of the return of allotment, the company must issue share certificates to the allottees within two months of the allotment. The share certificates must contain the details of the shares allotted, such as the face value, the number of shares, and the distinctive numbers.
The allotment of shares is a crucial process for a company, and it must be carried out in accordance with the provisions of the Companies Act 2013. The procedure involves issuing a prospectus or offer letter, receiving applications, making allotments, filing a return of allotment, and issuing share certificates. It is essential to ensure that the entire process is carried out in a transparent and legal manner to avoid any disputes or legal issues in the future.
Mayank Shekhar
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