Issue of Shares
India — Private Placement,
Rights, Bonus, FDI & ESOP
CA + CS assistance for every type of share issuance in India — fresh issue, private placement (§42), rights issue (§62), bonus shares (§63), ESOP (§62(1)(b)), sweat equity (§54), and FDI with FC-GPR. Board resolution, PAS-3, MGT-14, SH-1, FC-GPR — all handled. Starting ₹4,999. 7–15 working days.
2025-26 Updates — PAS-3 Penalty No Upper Cap, FDI Valuation, Pvt Ltd ESOP Rules Revised
PAS-3 Late Filing Penalty: ₹100/day per form with NO upper cap — a 200-day delay on PAS-3 = ₹20,000 per form. FDI Valuation (FEMA): Unlisted shares allotted to foreign investors must be valued at Fair Market Value by a SEBI-registered Chartered Accountant using DCF or NAV method — valuation certificate is mandatory for FC-GPR filing. Private Company ESOP: Private companies may now grant ESOPs to employees of holding, subsidiary, and associate companies — expanded under the 2023 amendment. SH-7 Authorised Capital: Stamp duty on increase in authorised capital varies by state — Maharashtra, Delhi, Karnataka have different rates. TAXAJ handles state-wise stamp duty calculation.
Issue of Shares in India — Complete Guide Under Companies Act 2013
The issue of shares is the process by which an Indian company creates new equity shares and allots them to investors, employees, or existing shareholders — in exchange for cash, services, or other consideration. Every share issuance in India is governed by the Companies Act, 2013 (primarily Sections 42, 54, 62, and 63), the Companies (Share Capital and Debentures) Rules, 2014, and for foreign investors, the FEMA (Foreign Exchange Management Act), 1999 and RBI's Master Directions on FDI. Errors in share issuance — wrong allotment procedures, missed PAS-3 filings, incorrect FEMA compliance — can render allotments void, attract penalties, and create serious title disputes with investors.
A Private Limited Company cannot offer shares to the public (no IPO or public offer) — it can only issue shares through: Private Placement (§42) to a maximum of 200 identified persons per financial year, Rights Issue (§62(1)(a)) to existing shareholders, Bonus Issue (§63) from free reserves, ESOP (§62(1)(b)) under an approved scheme, or Sweat Equity (§54) by special resolution. TAXAJ's CA + CS team handles the complete compliance chain — from Board resolution and offer letter drafting to PAS-3 ROC filing, share certificate issuance, and FC-GPR RBI reporting for foreign investors.
All Types of Share Issuance in India — Section, Procedure & Compliance
Select the type of share issue to see the exact statutory requirement, key steps, and filings required.
Complete Compliance Checklist — Filings for Every Type of Share Issue
| Filing / Document | Private Placement | Rights Issue | Bonus Issue | FDI Issue |
|---|---|---|---|---|
| Pre-Allotment | ||||
| Board Resolution | Required | Required | Required | Required |
| Special/Ordinary Resolution (EGM/AGM) | Not required for Pvt Ltd | Not required for Pvt Ltd | Ordinary Resolution required | Not required (Auto Route) |
| PAS-4 Offer Letter | Required — to each allottee | Letter of Offer (similar) | — | Required |
| CA Valuation Certificate | Recommended for new investors | — | — | Mandatory under FEMA |
| SH-7 (Increase Authorised Capital) | If needed | If needed | If needed | If needed |
| Post-Allotment | ||||
| PAS-3 Return of Allotment — ROC | Within 15 days of allotment | Within 15 days | Within 15 days | Within 15 days |
| MGT-14 — ROC (Board/SR Resolution) | Within 30 days of Board resolution | Within 30 days (if SR required) | Within 30 days | Within 30 days |
| SH-1 Share Certificate | Within 60 days of allotment | Within 60 days | Within 60 days | Within 60 days |
| FC-GPR — RBI FIRMS Portal | — | — | — | Within 30 days of allotment |
| Update Register of Members (MGT-1) | Within 7 days | Within 7 days | Within 7 days | Within 7 days |
TAXAJ Share Issuance Process — Private Placement (Typical Flow)
This is the standard TAXAJ process for a private placement to resident Indian investors. FDI issuances add Steps 5A and 5B for FEMA compliance.
Structure & Pre-Check — Capital, SH-7, Authorised Limit
TAXAJ reviews: current authorised capital vs proposed new total paid-up capital. If the proposed allotment would exceed authorised capital — SH-7 (increase in authorised capital) must be filed with ROC before allotment (with state stamp duty, which varies — Maharashtra 0.2%, Delhi 0.15%, etc.). Also check: any existing shareholders' pre-emption rights, any SHA (Shareholders Agreement) provisions on new share issuance, and FEMA applicability if any allottee is a foreign entity.
Board Resolution + PAS-4 Offer Letter
TAXAJ drafts the Board Resolution authorising the private placement — specifying number of shares, price, class, and list of proposed allottees (maximum 200 per FY under §42). The resolution also approves the PAS-4 (Private Placement Offer and Application Letter) to be issued to each proposed allottee. The PAS-4 letter is then issued individually to each identified allottee — containing the terms of the offer, application process, bank account details for payment, and acceptance deadline. A minimum 48-hour gap must exist between issuance of PAS-4 and collection of application money.
Allotment Board Resolution + PAS-3 within 15 Days
After application money is received in the company's bank account: another Board Resolution is passed formally allotting the shares. Immediately after the allotment resolution, TAXAJ files Form PAS-3 (Return of Allotment) with the ROC within 15 days of allotment. PAS-3 must include: number and class of shares allotted, price, names of allottees, bank details confirming money received. Late PAS-3 attracts ₹100/day with no cap. MGT-14 for the Board resolution is filed within 30 days. Register of Members (MGT-1) updated within 7 days.
SH-1 Share Certificate Issued Within 60 Days
Within 60 days of allotment, TAXAJ prepares and issues Form SH-1 (Share Certificate) to each allottee. SH-1 must contain: company name and CIN, certificate number, shareholder's name and address, number and class of shares held, nominal value, amount paid up per share, and distinctive numbers. It must be signed by two directors and the CS (or authorised person) and bear the company's common seal (if any). Share certificates are the physical/digital evidence of ownership — critical for future share transfers, pledges, and shareholder rights.
FC-GPR Filing (FDI Only) — Within 30 Days on RBI FIRMS Portal
For share allotments to non-resident or foreign investors: Form FC-GPR must be filed on the RBI FIRMS (SMF) portal within 30 days of allotment. Required documents: FIRC from the company's bank (confirming foreign remittance received), CA valuation certificate (DCF or NAV for unlisted shares), KYC of foreign investor, CS certificate of FEMA compliance, PAS-3 acknowledgement, and allotment resolution. FEMA penalty for late FC-GPR: up to 3× the transaction amount. TAXAJ files FC-GPR as an integrated deliverable — same team handles PAS-3 (ROC) and FC-GPR (RBI) simultaneously to meet both 15-day and 30-day deadlines.
Issue of Shares India — Frequently Asked Questions
Issue of Shares — TAXAJ Service Packages
- ✓Board resolution drafting
- ✓PAS-4 offer letter
- ✓PAS-3 ROC filing (15 days)
- ✓SH-1 share certificates
- ✓All Basic services
- ✓Full §42 private placement compliance
- ✓MGT-14 filing + SH-7 (if needed)
- ✓Rights issue letter of offer
- ✓All Standard services
- ✓CA FMV valuation certificate
- ✓FC-GPR on RBI FIRMS portal
- ✓ESOP scheme + EGM resolution