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Issue of Shares in Mumbai: Private Placement, Rights Issue, Preferential Allotment, and Bonus Issue

Reviewed by CA and CS Team, Patron Accounting LLP ICAI & ICSI Registered| 15+ Years Experience| Last Updated: 24 March 2026 Verify Credentials →

Private Placement: Section 42 | Special Resolution | PAS-4 offer letter | Max 200 persons/security/FY | Allotment within 60 days

Rights Issue: Section 62(1)(a) | Board Resolution | Offer to existing shareholders proportionately | 15-30 day offer period

Preferential Allotment: Section 62(1)(c) | Special Resolution | Valuation mandatory | Pricing at or above FMV

Key Deadline: PAS-3 within 30 days of allotment – funds CANNOT be used until PAS-3 is filed (private placement)

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Issue of Shares in Mumbai – Overview

📌 TL;DR - Issue of Shares Services at a Glance

Issue of shares is the creation and allocation of new shares by a company to investors in exchange for capital. Mumbai companies issue shares through four routes: private placement (Section 42 – to identified persons, most common for VC rounds), rights issue (Section 62(1)(a) – to existing shareholders), preferential allotment (Section 62(1)(c) – to select persons at preferential terms), and bonus issue (Section 63 – free shares from reserves). Each route requires specific resolutions, documentation, and ROC filings. For foreign investors, FC-GPR must be filed with RBI within 30 days. PAS-3 (Return of Allotment) must be filed within 30 days – and for private placements, funds cannot be used until PAS-3 is filed.

Mumbai has India's highest volume of share issuances – Powai VC-funded startups issuing equity/CCDs, BKC MNC subsidiaries receiving parent equity, Fort family businesses doing rights issues, Nariman Point companies issuing bonus shares, and Andheri tech companies allotting ESOPs. Learn more about Issue of Shares across India.

Patron Accounting's Mumbai office at Marine Lines – adjacent to ROC Mumbai Everest House – provides end-to-end share issuance: authorised capital verification (SH-7 if needed), valuation coordination, Board/EGM documentation, PAS-4 preparation, share allotment, PAS-3 filing within 15 days, share certificate stamping, and FC-GPR for foreign investors. For ongoing compliance, see Private Limited Company Compliance.

Content is reviewed quarterly for accuracy.

What Is Issue of Shares?

Issue of shares is the creation and allocation of new equity shares, preference shares, or other securities by a company to investors in exchange for capital. When shares are issued, the company's paid-up capital increases, new shareholders are added, and the company receives funds for operations or expansion.

Under the Companies Act, 2013, a private limited company can issue shares through four routes: private placement (Section 42), rights issue (Section 62(1)(a)), preferential allotment (Section 62(1)(c)), and bonus issue (Section 63). Each route has specific compliance requirements. A private company cannot make a public offer. For authorised capital increases before issuance, see Change in Authorised Capital.

For Mumbai companies, share issuance is the primary mechanism for raising growth capital. A Powai startup issues equity to a VC fund through private placement. A BKC MNC subsidiary issues shares to its foreign parent. A Fort family business issues rights shares. A profitable Nariman Point company issues bonus shares. Each triggers PAS-3 filing with ROC within 30 days, and for foreign investors, FC-GPR filing within 30 days.

Key Terms for Issue of Shares:

  • Section 42: Private placement – offer to identified persons, max 200/security/FY, Special Resolution, PAS-4
  • Section 62(1)(a): Rights issue – offer to existing shareholders proportionately, Board Resolution only
  • Form PAS-3: Return of Allotment – filed within 30 days; funds unusable until filed (private placement)
  • Form PAS-4: Private Placement Offer Letter – serially numbered, issued to each identified person
  • Section 63: Bonus issue – capitalisation of reserves, no cash outflow, Board + shareholder approval
  • FC-GPR: Filed with RBI within 30 days when shares allotted to non-resident investors
APL-05 Issue of Shares
CA & CS Managed Share Issuance

When Mumbai Companies Issue Shares

VC/PE fundraising at Powai and Andheri – Most common share issuance. Equity shares, CCDs, or CCPS to VC/PE through private placement (Section 42). Each round (seed, Series A, B, C) triggers Special Resolution, PAS-4, valuation, allotment within 60 days, PAS-3 within 30 days, and FC-GPR within 30 days for foreign investors.

Parent company equity infusion at BKC – MNC subsidiaries issue shares to foreign parent through preferential allotment. Requires Special Resolution, valuation, FEMA pricing compliance, PAS-3, and FC-GPR.

Rights issue to existing shareholders at Fort and Dadar – Family businesses raise capital from existing shareholders proportionately. Simpler: Board Resolution only, no valuation, 15-30 day offer period.

Bonus issue at BKC and Nariman Point – Profitable companies capitalise reserves into free shares. No cash exchanged. Board + shareholder approval. Common for companies wanting to increase share liquidity.

ESOP allotment at Powai and Andheri tech – Employees exercise vested options. Shares allotted at exercise price. PAS-3 within 30 days. Patron handles batch ESOP allotments.

Convertible instrument conversion – CCDs, CCPS, or convertible notes reaching conversion trigger become equity. Fresh PAS-3 filing required.

Debt-to-equity conversion – Outstanding loans/payables converted to equity with creditor consent. Private placement norms apply. Valuation mandatory.

Share Issuance Services Included

ServiceWhat We Do
Authorised Capital Verification & SH-7Verify sufficient authorised capital before issuance. If inadequate, file SH-7 (Board Resolution + EGM + ROC fee + Maharashtra stamp duty). Integrated SH-7 + issuance as single process for Powai startups
Valuation Report CoordinationFMV by SEBI-registered merchant banker or registered valuer (DCF for unlisted). Financial model prepared for Powai startups. Report within 90 days. Ensures agreed VC price is independently supported
Board Resolution & EGM DocumentationBoard Resolution (identify persons, approve terms). Special Resolution at EGM (75% majority) for private placement/preferential. Notices, explanatory statements, minutes. Rights/bonus: Board Resolution only
PAS-4 Offer Letter PreparationMandatory for private placement. Serially numbered, addressed to each identified person. Terms, price, application form, compliance declarations. Issued within 30 days of recording names
Share Allotment & PAS-3 FilingAllotment within 60 days (private placement). PAS-3 filed within 15 days (Patron standard). Pre-certified by CA/CS/CMA. Funds usable only after PAS-3 filed. Maharashtra stamp duty on certificates
FC-GPR Filing for Foreign InvestorsIntegrated Companies Act (PAS-3) + FEMA (FC-GPR) filing within 30 days. AD bank coordination with Mumbai-HQd banks. FIRC, valuation, CS certificate, KYC, shareholding pattern
MGT-14 FilingSpecial Resolution filed with ROC within 30 days (private placement/preferential). Filed before PAS-3 to maintain correct sequence
Post-Issuance ComplianceRegister of Members updated, MCA Master Data, shareholding pattern filed, statutory auditor coordination for financial statement disclosure
Our Process

Private Placement Process in Mumbai (Most Common)

Patron Accounting files PAS-3 within 15 days of allotment – ensuring Mumbai companies access their funds as quickly as possible. Our Marine Lines office is adjacent to ROC Mumbai Everest House.

Step 1

Verify Authorised Capital & Get Valuation

Check if authorised capital covers proposed issuance. If not, file SH-7 first (15-20 days). Get FMV valuation from SEBI merchant banker or registered valuer (DCF method). Share price must be at or above FMV. Patron handles SH-7 and valuation in parallel.

Capital verifiedValuation obtained
Pre-Cleared01
Step 2

Board Meeting & EGM with Special Resolution

Board Resolution to approve private placement, identify persons, approve terms/price, approve PAS-4, convene EGM. Pass Special Resolution (75% majority) at EGM. File MGT-14 with ROC within 30 days. Patron handles all documentation for Mumbai companies.

Special Resolution passedMGT-14 filed
Approved02
Step 3

Issue PAS-4 & Receive Subscription

Issue PAS-4 Offer Letter to each identified person within 30 days. Serially numbered, specific terms. Receive subscription money through banking channels only (no cash). For Powai VC rounds with staged closings, Patron tracks each tranche separately.

PAS-4 issuedSubscription received
Funds In03
Step 4

Allot Shares within 60 Days

Allot shares within 60 days of receiving application money. Board Resolution for allotment. Issue share certificates within 60 days of allotment (stamped per Maharashtra stamp duty). If not allotted within 60 days, refund within 15 days. Patron tracks allotment deadlines.

Shares allottedCertificates issued
Allotment Done04
Step 5

File PAS-3 within 30 Days

File Return of Allotment with ROC Mumbai on MCA V3 portal within 30 days. Pre-certified by practicing CA/CS/CMA. Critical: funds received through private placement CANNOT be used until PAS-3 is filed. Patron files within 15 days to unlock funds faster for Mumbai companies.

PAS-3 filed in 15 daysFunds unlocked
ROC Filed05
Step 6

File FC-GPR for Foreign Investors

If shares allotted to non-residents: file FC-GPR on RBI FIRMS portal through AD bank within 30 days. Attach FIRC, valuation, Board Resolution, CS certificate, investor KYC, shareholding pattern. Patron integrates PAS-3 (ROC) and FC-GPR (RBI) into one coordinated process.

FC-GPR filedDual compliance done
Complete06

Documents Required for Share Issuance in Mumbai

  • Board Resolution: Approving issuance, terms, price, identified persons, and EGM convening
  • Special Resolution: 75% majority at EGM (for private placement/preferential allotment)
  • PAS-4 Offer Letter: Serially numbered, addressed to each identified person (private placement)
  • Valuation Report: FMV by SEBI merchant banker or registered valuer (DCF for unlisted)
  • Share Subscription Agreement: Terms, rights, price, conditions between company and investor
  • Form PAS-3: Return of Allotment – pre-certified by CA/CS/CMA, filed within 30 days
  • Form MGT-14: Special Resolution filed with ROC within 30 days
  • Form SH-7: If authorised capital increase needed before issuance
  • Share Certificates: Issued within 60 days, stamped per Maharashtra stamp duty
  • FIRC & FC-GPR Documents: For foreign investors: FIRC, CS certificate, shareholding pattern, KYC

Mumbai-Specific Tip: Maharashtra stamp duty applies on share certificates at Rs 1 per Rs 1,000 of share value. For Powai startups issuing shares worth Rs 5-50 crore, stamp duty can be Rs 5,000-50,000. Paid electronically through the MCA portal at PAS-3 filing. Patron calculates exact stamp duty for every Mumbai share issuance.

Common Challenges in Share Issuance in Mumbai

ChallengeImpactHow Patron Accounting Solves It
Insufficient Authorised CapitalMost common blocking issue. Startups with Rs 1L authorised capital cannot issue Rs 5 crore in shares. SH-7 takes 15-20 days. Delays funding round if not anticipatedProactive SH-7 at term sheet signing. Integrated SH-7 + share issuance as single process. 30-40 days total
60-Day Allotment DeadlineShares must be allotted within 60 days of receiving money. Each tranche has its own clock. Missing = mandatory refund + compliance violationEvery tranche's 60-day deadline tracked separately. Allotment documentation prepared before money is received
PAS-3 Before Fund UtilisationFor private placements, funds CANNOT be used until PAS-3 is filed with ROC. Delayed PAS-3 = funds sitting idle in bank accountPAS-3 filed within 15 days of allotment (Patron standard). Funds unlocked 15 days earlier than typical 30-day filing
200-Person LimitPrivate placement offers cannot exceed 200 persons per security type per FY. Exceeding = deemed public offer with Rs 2 crore penaltyCount tracked across all issuances in FY. Alert before limit approached. Separate security types counted separately
Integrated Companies Act + FEMAForeign investor allotments require both PAS-3 (ROC, 30 days) and FC-GPR (RBI, 30 days). Missing either creates separate violationsBoth filings managed as coordinated dual process. AD bank liaison for faster FIRC and FIRMS processing

Share Issuance Fees in Mumbai

Fee ComponentAmount
Form PAS-3 Filing FeeRs 200 (small company) / Rs 600 (others) – filed within 30 days of allotment
Form MGT-14 Filing FeeRs 200 / Rs 600 – for Special Resolution (private placement/preferential)
Maharashtra Stamp Duty on Share CertificatesRs 1 per Rs 1,000 of share value – paid electronically via MCA portal
Valuation CertificateRs 25,000 – Rs 1,00,000 (SEBI merchant banker or registered valuer)
Penalty for Section 42 ViolationUp to Rs 2 crore or amount raised (whichever higher) + refund
Patron Fee – Private Placement (Single Round)Starting Rs 10,000 (valuation + PAS-4 + allotment + PAS-3 + MGT-14)
Patron Fee – Rights IssueStarting Rs 7,000 (offer letter + allotment + PAS-3)
Patron Fee – Bonus IssueStarting Rs 5,000 (Board/shareholder approval + allotment + PAS-3)
Patron Fee – Share Issuance + SH-7 BundleStarting Rs 15,000 (authorised capital increase + share issuance + all filings)
Patron Fee – Share Issuance + FC-GPR BundleStarting Rs 20,000 (private placement + PAS-3 + FC-GPR for foreign investor)

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free Issue of Shares consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

Share Issuance Timeline

StageEstimated Timeline
Authorised Capital Increase (SH-7)15-20 working days – must be completed before allotment (if needed)
Valuation Report5-10 working days – coordinate early; within 90 days of allotment
Board Meeting + EGM + Special ResolutionDay 1-22 (or Day 1-3 with short notice consent)
PAS-4 Offer Letter + Subscription MoneyWithin 30 days of recording names; banking channels only
Share AllotmentWithin 60 days of receiving application money
File MGT-14Within 30 days of Special Resolution
File PAS-3Within 30 days of allotment (Patron: within 15 days) – funds unlocked after filing
File FC-GPR (foreign investors)Within 30 days of allotment on RBI FIRMS portal
Patron End-to-End (without SH-7)15-25 working days (EGM to PAS-3 approval)
Patron End-to-End (with SH-7)30-40 working days (SH-7 + share issuance complete cycle)

PAS-3 filing speed directly impacts fund access. For private placements, subscription money cannot be used until PAS-3 is filed. Patron files PAS-3 within 15 days of allotment, unlocking funds 15 days earlier than the 30-day deadline. For Mumbai startups needing funds immediately, this speed advantage is critical.

Key Benefits

Why Choose Patron for Share Issuance in Mumbai

Adjacent to ROC Everest House

PAS-3 processed by ROC Mumbai. Proximity enables fastest possible filing and coordination for urgent VC closing deadlines.

Integrated SH-7 + Issuance

Authorised capital increase and share issuance handled as single process. One timeline, one team. Minimises total duration for Mumbai startups needing both.

Companies Act + FEMA Coordination

PAS-3 (ROC) and FC-GPR (RBI) managed as coordinated dual filing for foreign investor rounds. AD bank HQ coordination in Mumbai for faster FIRC and FIRMS processing.

All 4 Issuance Types

Private placement (Powai VC), rights issue (Fort families), preferential allotment (BKC MNCs), bonus issue (profitable companies). Correct type determined per situation.

Trusted by Mumbai Companies

Trust Signals: 10,000+ Businesses | 4.9 Google Rating | 50,000+ Documents Filed | 15+ Years

“Patron handled our Series A share issuance end-to-end – SH-7 authorised capital increase, valuation, PAS-4, allotment, PAS-3, and FC-GPR for our US investor – all completed in 25 days before the investor deadline.”

— Founder, EdTech Startup, Powai

Offices in Pune, Mumbai, Delhi, and Gurugram serving companies with share issuance, MCA compliance, and corporate governance.

Pre-Conditions Checklist Before Issuing Shares

#Pre-ConditionCheckAction if Not Met
1Authorised capital sufficientNew shares ≤ available authorised capitalFile SH-7 to increase before allotment
2No partly paid shares (for bonus)All existing shares fully paid upCollect unpaid calls before bonus issue
3AOA permits the issuance typeAOA includes relevant provisionsAlter AOA if needed (Special Resolution)
4Sectoral cap (foreign investors)FDI within sectoral limit post-allotmentVerify cap before accepting investment
5Valuation report (private/preferential)Current FMV certificateArrange before Board approval
6Entity Master on FIRMS (foreign)EMF created/updated on FIRMS portalSet up before investment round
7AD bank KYC (foreign investors)Foreign investor KYC completedInitiate KYC process early
8No default on deposits/debenturesCompany not in repayment defaultClear defaults before issuance

Related Services

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Legal & Compliance Framework for Share Issuance

  • Section 42: Private placement – max 200 persons/security/FY, Special Resolution, PAS-4, banking channels only
  • Section 62(1)(a): Rights issue – offer to existing shareholders proportionately, Board Resolution
  • Section 62(1)(c): Preferential allotment – Special Resolution, valuation, pricing at or above FMV
  • Section 63: Bonus issue – capitalisation of reserves, no partly paid shares, Board + shareholder approval
  • Section 56: Share certificates within 60 days of allotment
  • Rule 13/14: Pricing for preferential allotment and private placement procedure
  • Form PAS-3: Return of Allotment within 30 days – funds unusable until filed (private placement)
  • Form PAS-4: Private Placement Offer Letter – serially numbered
  • FEMA/NDI Rules: FC-GPR within 30 days for foreign investor allotments; FMV pricing mandatory
  • Penalty (Section 42): Up to Rs 2 crore or amount raised + refund obligation
  • ROC Mumbai: Everest House, 100 Marine Lines, Mumbai 400020

Filing Portal: mca.gov.in (MCA V3 portal)

Frequently Asked Questions – Issue of Shares in Mumbai

Get answers about private placement, rights issue, PAS-3, valuation, foreign investors, 200-person limit, and bonus issue for Mumbai companies.

Quick Answers

Shares kaise issue kare company mein? Rights issue: Board Resolution + offer to existing shareholders + PAS-3. Private placement: Special Resolution + PAS-4 + valuation + allotment 60 din mein + PAS-3 30 din mein. Bonus: reserves se free shares + Board + shareholder approval. Foreign investor ko issue karna hai toh FC-GPR bhi file karo.

Kya authorised capital badhana padega pehle? Haan agar new shares authorised capital se zyada hain. SH-7 file karo 15-20 din lagenge. Phir shares issue karo. Patron dono saath mein handle karta hai.

Private placement mein kitne logon ko offer kar sakte hain? Maximum 200 persons per security type per financial year. Exceed ho gaya toh deemed public offer – penalty Rs 2 crore tak. Patron count track karta hai poore saal.

Don't Let PAS-3 Delays Lock Your Funds – Issue Shares the Right Way

Share issuance urgency is driven by investor timelines and regulatory deadlines. The 60-day allotment deadline from receiving money is binding. PAS-3 must be filed within 30 days – and funds cannot be used until it is. Every day of PAS-3 delay means capital sitting idle. For foreign investors, FC-GPR adds a parallel 30-day compliance track. Professional coordination ensures Mumbai companies close funding rounds on time and access funds immediately.

Issue your shares today – Call +91 945 945 6700 or WhatsApp us.

Get End-to-End Share Issuance in Mumbai

Issue of shares in Mumbai covers the full spectrum – from private placement for Powai VC rounds to rights issue for Fort family businesses, from preferential allotment for BKC MNC equity infusions to bonus issue for profitable companies, from ESOP allotment to convertible instrument conversion.

Patron Accounting's Mumbai office at Marine Lines – adjacent to ROC Everest House – provides end-to-end services: authorised capital verification, SH-7 increase, valuation coordination, Board/EGM documentation, PAS-4, share allotment, PAS-3 within 15 days, share certificate stamping, and FC-GPR for foreign investors.

With offices in Pune, Mumbai, Delhi, and Gurugram, 10,000+ businesses served, and 4.9 Google rating, Patron Accounting LLP delivers fast, compliant share issuance across India.

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Share Issuance Across India

Patron Accounting handles share issuances in major cities with local ROC coordination and integrated FEMA compliance.

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Content Created: 24 March 2026  |  Last Updated: 24 March 2026  |  Next Review: 24 September 2026  |  Reviewed By: CA & CS Team, Patron Accounting LLP

This content is reviewed bi-annually for accuracy of Companies Act provisions, SEBI ICDR amendments, and FEMA pricing norms. Freshness Tier: 2.

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