Address : Casaheb,
- B-4 Spaze It Park, Sohna Road, Gurgaon, Haryana, 122018
- Phone +91-9717076556
- anup@casaheb.in
Allotment of Shares: Understanding the Process for Your Company
- Allotment of shares
- Share capital
- Board resolution
- Registrar of Companies (ROC)
- Company formation
- Companies Act, 2013
Key Steps in the Allotment of Shares
1
Raising Capital
The primary purpose of the allotment of shares is to
raise capital for the company. By issuing shares,
companies can raise funds to finance their operations,
expansion, and other business activities.
2
Ownership and Control
The process of share allotment determines the ownership
and control of the company. The number of shares
allotted to each shareholder defines their stake in the
company and the extent of their influence in corporate
decision-making.
3
Legal Compliance
The Companies Act, 2013 mandates that companies must
follow specific procedures while allotting shares to
ensure legal compliance. Allotting shares improperly or
failing to file the necessary paperwork can result in
penalties.
4
Investor Confidence
Proper allotment of shares enhances transparency and
investor confidence. It ensures that all transactions
are properly documented and that investors receive their
fair share of ownership.
How to Allotment of Shares: Understanding the Process for Your Company
The allotment of shares is a critical process in the formation
and expansion of a company. It refers to the distribution of
the company’s shares to its shareholders, whether they are
founders, investors, or others who wish to own a portion of
the company. The process of share allotment impacts the
ownership structure and capital raising ability of the
company, making it an essential step in the corporate
lifecycle.
Types of Share Allotment
- Equity Shares: These are the most common form of shares allotted by companies. Equity shareholders have voting rights and are entitled to dividends.
- Preference Shares: These shares offer a fixed rate of return but do not carry voting rights. Preference shareholders receive dividends before equity shareholders.
- Bonus Shares: These are allotted to existing shareholders without any cost, based on the company’s profits and reserves.
- Right Shares: Companies may offer right shares to existing shareholders to raise additional capital, providing them the option to purchase shares at a discounted rate before offering them to the public.
Key Steps in the Allotment of Shares
Board Resolution
The first step in the allotment process is for the board of
directors to pass a resolution to allot the shares. This
resolution approves the number of shares to be allotted and
to whom they will be allotted.
Application for Shares
Investors or shareholders must apply for the shares. In some
cases, applications can be done through a prospectus or
private placement offer. The company’s shareholders need to
submit an application to subscribe to the shares.
Payment for Shares
After the application is made, the shareholders must pay the
full or partial amount for the shares they are subscribing
to. Payment may be required in cash or in kind, depending on
the nature of the shares being allotted.
Allotment and Issue of Share Certificates
Once the payment is received, the company issues share
certificates to the shareholders. These certificates are
legal documents that represent ownership in the company and
are used to transfer shares.
Filing with Registrar of Companies (ROC)
The company is required to file the return of allotment with
the Registrar of Companies (ROC) within 30 days of allotting
the shares. This return contains details such as the number
of shares allotted, the names of the shareholders, and the
payment received.
Issuance of Share Capital
Once the allotment is made, the shares are officially
recorded in the company’s books, and the company’s paid-up
capital is increased accordingly.
Troll Free Number :
+91-9717076556
Opening Hours :