Further Issue of Share Capital

Notified Date of
Further Issue of Share Capital

Section: 01/04/2014
62. (1) Where at any time, a company having a share capital proposes to increase its subscribed
3&4
capital by the issue of further shares, such shares shall be offered—

(a) to persons who, at the date of the offer, are holders of equity shares of the company in proportion,
as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of
offer subject to the following conditions, namely:—
1[(i)
the offer shall be made by notice specifying the number of shares offered and limiting a time not
being less than fifteen days and not exceeding thirty days from the date of the offer within which the
offer, if not accepted, shall be deemed to have been declined;]
(ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to
include a right exercisable by the person concerned to renounce the shares offered to him or any of
them in favour of any other person; and the notice referred to in clause (i) shall contain a statement of
this right;
(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from
the person to whom such notice is given that he declines to accept the shares offered, the Board of
Directors may dispose of them in such manner which is not dis-advantageous to the shareholders and
the company;]
(b) to employees under a scheme of employees' stock option, subject to 2&5[special resolution] passed
by company and subject to such conditions as may be prescribed; or
(c) to any persons, if it is authorised by a special resolution, whether or not those persons include the
persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash, if
the price of such shares is determined by the valuation report 6[of a registered valuer, subject to the
compliance with the applicable provisions of Chapter III and any other conditions as may be
prescribed]
7[(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be dispatched
through registered post or speed post or through electronic mode or courier or any other mode having
proof of delivery to all the existing shareholders at least three days before the opening of the issue.]
(3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused
by the exercise of an option as a term attached to the debentures issued or loan raised by the
company to convert such debentures or loans into shares in the company:
Provided that the terms of issue of such debentures or loan containing such an option have been
approved before the issue of such debentures or the raising of loan by a special resolution passed by
the company in general meeting.
*(4) Notwithstanding anything contained in sub-section (3), where any debentures have been issued,
or loan has been obtained from any Government by a company, and if that Government considers it
necessary in the public interest so to do, it may, by order, direct that such debentures or loans or any
part thereof shall be converted into shares in the company on such terms and conditions as appear to
the Government to be reasonable in the circumstances of the case even if terms of the issue of such
debentures or the raising of such loans do not include a term for providing for an option for such
conversion:
Provided that where the terms and conditions of such conversion are not acceptable to the company,
it may, within sixty days from the date of communication of such order, appeal to the Tribunal which
shall after hearing the company and the Government pass such order as it deems fit.
*(5) In determining the terms and conditions of conversion under sub-section (4), the Government
shall have due regard to the financial position of the company, the terms of issue of debentures or
loans, as the case may be, the rate of interest payable on such debentures or loans and such other
matters as it may consider necessary.
*(6) Where the Government has, by an order made under sub-section (4), directed that any debenture
or loan or any part thereof shall be converted into shares in a company and where no appeal has
been preferred to the Tribunal under sub-section (4) or where such appeal has been dismissed, the
memorandum of such company shall, where such order has the effect of increasing the authorised
share capital of the company, stand altered and the authorised share capital of such company shall
stand increased by an amount equal to the amount of the value of shares which such debentures or
loans or part thereof has been converted into.]
Note:
* Sub-section (4), (5) and (6) has been notified as on 01/06/2016.
Amendment
6 Substituted by the Companies (Amendment) Act, 2017 :- Amendment Effective From 09th February
2018
In sub-section (1) of Section 62,
for the words "of a registered valuer subject to such conditions as may be prescribed".
the following words shall be substituted, namely :-
"of a registered valuer, subject to the compliance with the applicable provisions of Chapter III and any
other conditions as may be prescribed"
7 Substituted by the Companies (Amendment) Act, 2017 :- Amendment Effective From 09th February
2018
For sub-section (2) of Section 62,
The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be despatched through
registered post or speed post or through electronic mode to all the existing shareholders at least three
days before the opening of the issue.
The following sub section shall be substituted, namely :-
"The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be dispatched through
registered post or speed post or through electronic mode or courier or any other mode having proof
of delivery to all the existing shareholders at least three days before the opening of the issue."
Exceptions/ Modifications/ Adaptations

1. In case of private company- In Sub-clause (i) of clause (a) of Sub-section (1) and Sub-section (2) of
Section 62 the following proviso shall be inserted
Provided that notwithstanding anything contained in this sub-clause and sub-section (2) of this
section, in case ninety percent, of the members of a private company have given their consent in
writing or in electronic mode, the periods lesser than those specified in the said sub- clause or sub-
section shall apply. - Inserted by notification dated 5th june, 2015.
2. In case of private company - In clause (b) of Sub-section (1) of Section 62 for the words "special
resolution", the words "ordinary resolution" shall be substituted . - Notification dated 5th june, 2015.
3. In case of Nidhi company - Section 62 shall not apply - Notification dated 5th june, 2015.
4.In case of Specified IFSC Public Company - In clause (a) of sub-section (1), the following proviso
shall be inserted, namely:-
“Provided that notwithstanding anything contained in sub-clause (i), in case of a Specified IFSC public
company, the periods lesser than those specified in the said sub-clause shall apply if ninety per cent.
of the members have given their consent in writing or in electronic mode.”. - Notification Date 4th
January, 2017
5. In case of Specified IFSC Public Company - Clause (b) of Sub- section (1) of section 62 for the
words “special resolution” read as “ordinary resolution”. - Notification Date 4th January, 2017

Further Issue of Share Capital

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Notified Date of

Further Issue of Share Capital

capital by the issue of further shares, such shares shall be offered—

Exceptions/ Modifications/ Adaptations

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