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Board Resolution for Issue of Preference Shares
CERTIFIED TRUE COPY OF THE BOARD RESOLUTION
Passed at the Meeting of the Board of Directors
________________
CIN: ________________
Date of Meeting: __________ at __________ Hours at the Registered Office of the Company.
SUBJECT: Issue and Allotment of Preference Shares on Private Placement Basis
RESOLVED THAT pursuant to the provisions of Sections 23, 42, 55, and 62 of the Companies Act, 2013, the consent of the Board be and is hereby accorded to issue and allot:
________________ Preference Shares of Rs. ______/- each
Dividend Rate: ______% p.a.
Tenure: ______ years
Type: ________________
Signature
Board Resolution for Issue and Allotment of Preference Shares on Private Placement Basis
Corporate Finance Documentation for Indian Companies
Introduction
A Board Resolution for Issue and Allotment of Preference Shares on Private Placement Basis is a formal corporate document that records the Board of Directors' consent to issue preference shares to identified investors through the private placement route. Under the Companies Act, 2013, companies proposing to issue preference shares on a private placement basis must obtain prior board approval. Preference shares carry preferential rights over equity shares with respect to dividend payments and capital repayment upon winding up.
This resolution specifies the number of preference shares to be issued, the face value per share, the aggregate consideration, the dividend rate, tenure of the preference shares, and details of the allottees. The document authorises issuance of share certificates under the common seal of the company and filing of Form PAS-3 (Return of Allotment) with the Registrar of Companies. Private placement of preference shares is commonly used by companies seeking to raise capital from select investors without the regulatory requirements of a public offer.
Benefits of Using a Standard Format
Utilising a professionally drafted board resolution format ensures that all statutory requirements under the Companies Act, 2013 and the Companies (Share Capital and Debentures) Rules, 2014 are properly addressed. A ready-to-use template saves valuable time during board meetings, reduces the risk of procedural errors, and provides a consistent framework capturing allottee information, share particulars, dividend rates, and tenure.
Standardised formats ensure compliance with private placement regulations.
Relevance to Corporate Finance
Issue of preference shares is a significant corporate finance activity. Following Company Registration, businesses may raise capital through various instruments including equity shares, preference shares, and debentures. Preference shares offer a middle ground between debt and equity, providing fixed returns to investors while not diluting voting control.
Companies must comply with provisions relating to private placement offers, ROC filing requirements, and maintenance of statutory registers. Post-allotment, companies should ensure their records are updated across all statutory registrations.
Board Resolution for Issue and Allotment of Preference Shares on Private Placement Basis – Sample Format
Company Name: _______________________________________
CIN: _______________________________________
Registered Office: _______________________________________
Email: _______________________________________
CERTIFIED TRUE COPY OF THE BOARD RESOLUTION
Passed at the Meeting of the Board of Directors of the Company
Date of Meeting: __.__.______
Time: ______ (Hours)
Venue: Registered Office of the Company
SUBJECT: ISSUE AND ALLOTMENT OF PREFERENCE SHARES ON PRIVATE PLACEMENT BASIS
"RESOLVED THAT pursuant to the provisions of Sections 23, 42, 55, and 62 of the Companies Act, 2013 read with the Companies (Share Capital and Debentures) Rules, 2014, the Companies (Prospectus and Allotment of Securities) Rules, 2014, and such other applicable laws and rules (including any statutory modification or re-enactment thereof for the time being in force), and in accordance with the Memorandum and Articles of Association of the Company, the consent of the Board of Directors be and is hereby accorded to issue and allot fully paid-up Preference Shares of the Company as detailed below:
Number of Preference Shares: ____________ (________________ in words)
Face Value per Share: Rs. ____________/-
Dividend Rate: ____________% per annum
Tenure: ____________ years from the date of allotment
Type: Cumulative/Non-Cumulative, Redeemable/Convertible (specify)
The Preference Shares shall be allotted to the following persons:
| Sr. No. | Name of Allottee | No. of Preference Shares | Amount (Rs.) | Dividend Rate (p.a.) | Tenure |
|---|---|---|---|---|---|
| 1 | |||||
| 2 | |||||
| Total | |||||
RESOLVED FURTHER THAT any Director of the Company be and is hereby authorised to sign and file Form PAS-3 (Return of Allotment) with the Registrar of Companies within the prescribed time.
RESOLVED FURTHER THAT the share certificates in respect of the aforesaid Preference Shares be issued to the respective allottees under the Common Seal of the Company (if applicable) and under the signatures of the Directors of the Company.
RESOLVED FURTHER THAT any Director of the Company be and is hereby authorised to:
- Make necessary entries in the Register of Members and other statutory registers;
- Execute all documents, agreements, and writings as may be required;
- File requisite e-forms with the Registrar of Companies within the prescribed time;
- Do all such acts, deeds, matters, and things as may be necessary, proper, or expedient for giving effect to this resolution."
For ________________________________________
(Name of the Company)
Signature: __________________________
Name: __________________________
Designation: __________________________
DIN: __________________________
Frequently Asked Questions
1. Can a board resolution for issue and allotment of Preference Shares on Private Placement basis be passed without a physical or virtual board meeting?
While the Companies Act permits certain resolutions to be passed by circulation, matters involving securities issuance typically require deliberation at a duly convened board meeting. If the Articles of Association permit written resolutions for such matters, it may be possible. However, standard practice recommends conducting a proper board meeting for thorough discussion of share allotment terms and compliance requirements.
2. Who can be considered as an authorized signatory for the board resolution for issue and allotment of Preference Shares on Private Placement basis?
Any director present at the board meeting or the company secretary (if appointed) may be authorised to sign the certified true copy of the resolution. The Board typically designates directors to file Form PAS-3 with the ROC, issue share certificates, make entries in the Register of Members, and represent the company in all matters related to the allotment.
3. Are there any specific requirements for the format of the board resolution for issue and allotment of Preference Shares on Private Placement basis?
The resolution should reference Sections 23, 42, 55, and 62 of the Companies Act, 2013 and the relevant rules. It must specify the number of preference shares, face value, dividend rate, tenure, type (cumulative/non-cumulative, redeemable/ convertible), and complete allottee details. The resolution should authorise Form PAS-3 filing, share certificate issuance, and statutory register entries.
4. Does the Board Resolution for issue and allotment of Preference Shares on Private Placement basis need to be certified by a professional?
There is no statutory requirement for the board resolution to be certified by an external professional. The certified true copy may be signed by any director or the company secretary. However, for filing Form PAS-3 with the ROC, certification by a practising Chartered Accountant, Company Secretary, or Cost Accountant may be required as per form-specific requirements.
5. Can a board resolution for issue and allotment of Preference Shares on Private Placement basis be passed without convening a board meeting?
Securities issuance matters typically require deliberation at a duly convened board meeting. While the Articles of Association may permit certain resolutions by circulation, it is advisable to conduct a proper board meeting for matters involving share allotment to ensure thorough discussion, due consideration of terms, and proper recording in the minutes of the meeting.
6. Who can certify a board resolution for issue and allotment of Preference Shares on Private Placement basis?
Any director of the company or the company secretary (if appointed) may certify the board resolution. The person certifying should have been present at the meeting or have access to the minutes. The certified true copy confirms that the resolution was duly passed at a validly convened board meeting and accurately reflects the decisions recorded in the minutes.