Rights Issue of Shares under Section 62(1)(a)

Rights issue services from Patron Accounting cover the entitlement ratio, the letter of offer, the renunciation mechanism, allotment and the PAS-3 filing. Unlike a preferential allotment, a rights issue needs no special resolution and no mandatory valuer report. Our team has supported 10,000+ businesses since 2009.

A rights issue is a pro-rata fresh-capital raise to existing shareholders with a right of renunciation. It is distinct from a bonus issue under Section 63, which capitalises reserves as a no-cash reward, and from a preferential allotment under Section 62(1)(c) to select persons. If the authorised capital must be raised first, our change in authorised capital service handles the SH-7 step.

A rights issue suits any company, private or public, that wants to raise capital from its existing shareholders without bringing in outsiders by default. The conditions follow Section 62(1)(a).

• Pro-rata offer: Shares are offered to existing equity holders in proportion to their paid-up holding.
• Offer window: The letter of offer stays open for 15 to 30 days; a shorter period applies for private companies with 90 percent member consent.
• Right to renounce: Unless the Articles say otherwise, shareholders can renounce their rights to another person.
• Unsubscribed shares: The Board may allot the unsubscribed portion in a manner not disadvantageous to the company and members.
• Authorised capital: The authorised capital must cover the new shares; if not, it is increased first.

If the authorised capital must be raised first, our change in authorised capital service handles the SH-7 step.

• Capital structure and authorised capital details.
• Articles of Association and shareholder register.
• Board resolution and the letter of offer.
• Acceptance and renunciation forms from shareholders.
• List of allottees with name, address and shares.
• Valid DSC of the signatory for ROC filings.

Need the full checklist? We share a ready rights issue checklist when you engage us.

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.

Any SH-7 increase in authorised capital with its MCA fee and stamp duty, an optional valuation, and FEMA filings for non-resident participants are charged on an actual basis. Contact us for a detailed quote.

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

10,000+ Businesses Served | 4.9 Google Rating | 50,000+ Documents Filed | 15+ Years

"We needed fresh capital from our existing investors without diluting anyone. Patron ran the rights issue end to end, including renunciation." - Founder, technology company, Bengaluru.

"Patron managed our rights issue and PAS-3 cleanly, and handled the FEMA side for our overseas shareholder." - Director, manufacturing company, Pune.

Trusted by leading brands including Hyundai, Asian Paints and Bridgestone for accounting and compliance support.

With offices in Pune, Mumbai, Delhi, and Gurugram, Patron Accounting serves businesses across India - both in-person and remotely.

A rights issue connects with other share capital actions, and sits alongside a preferential allotment under Section 62(1)(c) and a bonus issue under Section 63 as the other main routes to issue shares. Patron handles the linked work too.

• Issue of Shares for other modes of issuing shares.
• Change in Authorised Capital for the SH-7 increase before a rights issue.
• Transfer of Shares for changes in shareholding between members.
• ESOP Management and Compliance for employee share plans.
• Private Limited Company Compliance for ongoing annual compliance.

Offer route: Section 62(1)(a) of the Companies Act, 2013 requires further shares to be offered to existing equity shareholders in proportion to their paid-up holding through a letter of offer.

Offer period and renunciation: The offer stays open not less than 15 and not more than 30 days, with a shorter period for private companies on 90 percent consent, and unless the Articles provide otherwise it includes a right to renounce in favour of any person.

Approval and pricing: A rights issue is approved by a Board resolution and does not require a special resolution, and a registered-valuer report is not mandatory; the Board sets the price, subject to FEMA where a non-resident is involved.

Allotment and filing: Shares are allotted within 60 days of receipt of money, and PAS-3 is filed with the ROC within 30 days of allotment. No prospectus is required for a rights issue.

Refer to the MCA portal for forms and to Section 62 on IndiaCode for the bare provision.

The timeline and documents are exacting. The offer period, the at-least-three-days dispatch, renunciation forms and the 60-day allotment all have to line up, and a non-resident participant adds FEMA pricing. Getting the structure right from the start avoids a defective offer and keeps your capital raise on schedule.

Plan your rights issue - Call +91 945 945 6700 or WhatsApp us. We respond within 2 hours.

A rights issue under Section 62(1)(a) raises fresh capital from existing shareholders pro rata, through a letter of offer open for 15 to 30 days, with a right of renunciation and no need for a special resolution or a mandatory valuer report.

Getting the entitlement ratio, the offer period, renunciation and the PAS-3 filing right is what keeps the issue valid. Patron Accounting, with qualified CAs and CSs and offices in Pune, Mumbai, Delhi and Gurugram, runs the full rights issue so your capital raise is clean and compliant.

10,000+ Businesses | 4.9 Rating | 50,000+ Documents Filed | 15+ Years. Book a free consultation today.