{"id":346762,"date":"2025-12-16T10:35:47","date_gmt":"2025-12-16T10:35:47","guid":{"rendered":"https:\/\/peraltafinancing.com\/uncategorized\/rights-issue-under-companies-act-2013-legal-recourse\/"},"modified":"2025-12-16T10:35:47","modified_gmt":"2025-12-16T10:35:47","slug":"rights-issue-under-companies-act-2013-legal-recourse","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=346762","title":{"rendered":"Rights Issue under Companies Act 2013 \u2013 Legal Recourse"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">This article aims to provide the readers complete information pertaining to the process of rights issue under the Companies Act 2013. \u201cRights Issue\u201d, in very simple term means issue of shares by a company to its existing equity shareholders in proportion to their existing share holding. It is a mechanism through which a company can infuse fresh capital into its business. Any company \u2013 a private, public, listed or unlisted company can undertake a rights issue. The Rights shares are considered to be a type of \u201coption\u201d since they are in the nature of a right and do not act as an obligation for the shareholders of the company, to purchase additional shares in the company.<\/p>\n<p><strong><u>Procedure for rights issue under Companies Act 2013<\/u><\/strong><\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">According to Section 62 (1) of the Companies Act 2013 (\u201c<strong>Act<\/strong>\u201d), the procedure for issue of shares is as follows:<\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">\u2013 <strong>Issue of notice for conducting a Board meeting:<\/strong><\/p>\n<p>According to Section 173(3) of the Act, the notice for conducting a board meeting has to be sent to the board of directors, minimum 7 days prior to the board meeting. Such notice must also specify the agenda for the meeting.<\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">\u2013 <strong>Convening Board Meeting:<\/strong><\/p>\n<p>Once the board meeting is held, and the resolution for issuing rights shares is passed, the board can proceed towards the issue. The rights issue does not require the approval of shareholders.<\/p>\n<p>On the passing of the resolution, the letter of offer is issued to all shareholders, and the same is sent through registered post or speed post or via electronic means. For shareholders to accept the offer, the offer should last between 15 \u2013 30 days. So technically, the maximum time the shareholders can take to accept such offer is 30 days and the minimum period is 15 days. <\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">If the shareholder holder does not provide any response, the offer will deemed to be lapsed. If a shareholder is not interested in accepting the offer of additional shares, he can renounce the same in favour of any other person, who may not be member of the company.\u00a0<\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">\u2013 <strong>Filing of e-form MGT \u2013 14:<\/strong><\/p>\n<p>After the passing of board resolution, the company must file the MGT -14 (applicable only to Public Limited Company) within 30 days of passing of the Board Resolution. A true certified copy of the Board Resolution also needs to be attached to MGT 14.<\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">\u2013 <strong>Receipt of Application Money:<\/strong><\/p>\n<p>The shareholders must send the accepted application along with application money.<\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">\u2013 <strong>Convening Second Board Meeting for allotment of shares:<\/strong><\/p>\n<p>The company must convene the second board meeting for the purpose of allotment of shares and carrying out other provisions for undertaking rights issue, the notice of which must be sent 7 days prior to the board meeting. The required quorum must be present, and the resolution for the allotment of shares must be passed. On passing the resolution for allotment of shares, the allotment of shares must be done within 60 days of receiving the application money for the same.<\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">\u2013 <strong>Filing of e- forms with Registrar of Companies:<\/strong><\/p>\n<p>The company must also file Form PAS -3 (\u201c<strong>Return of Allotment<\/strong>\u201c), within 30 days from the allotment of the shares with the Registrar of Companies. The certified true copy of the Board Resolution and the list of the allottees must be attached to the form. Additionally, the MGT \u2013 14 must also be filed for both the allotment and issue of shares.<\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">\u2013 <strong>Issue of Share Certificates:<\/strong><\/p>\n<p>The share certificates must be issued in Form SH -1. If the shares are held in Demat form, then the company must inform the depository immediately on allotment of shares. If the shares are held in physical form, then the share certificates must be issued within 2 months from the date of allotment of shares. Once the share certificates have been issued, requisite changes shall be also be made in the Register of Members (\u201c<strong>MGT-1<\/strong>\u201c).<\/p>\n<p style=\"font-size:18px;\"><strong><u>Understanding the \u201cRight of Pre-emption\u201d<\/u><\/strong><\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">\u201cA pre-emption right\u201d or \u201cright of pre-emption\u201d is the \u201cfirst option to buy a contractual right\u201d.As per Section 62(1) of the Companies Act, 2013 if the Company decides to issue fresh shares, these should be offered to existing shareholders in proportion to existing persons who are holders of equity shares. The existing equity shareholders have the right of pre-emption over the new investors. However,the existing shareholders are not to be given further pre-emptive rights in respect of the shares.not accepted by them.\u00a0<\/p>\n<p style=\"font-size:18px;\"><strong><span style=\"text-decoration:underline;\">Conclusion<\/span><\/strong><\/p>\n<p class=\"has-text-align-justify\" style=\"font-size:14px;\">Rights issue is a mechanism through which a company can raise capital to serve the purpose of its business expansion activities without reaching out to the general public. This resolves the purpose of additional capital while letting existing shareholders retain their voting rights in the company.<\/p>\n<p><span id=\"wordads-inline-marker\" style=\"display: none;\"\/>\t<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>This article aims to provide the readers complete information pertaining to the process of rights issue under the Companies Act 2013. \u201cRights Issue\u201d, in very simple term means issue of shares by a company to its existing equity shareholders in proportion to their existing share holding. It is a mechanism through which a company can [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":322809,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[145167],"tags":[7622,11269,15294,6036,80355,13922],"dealstore":[],"offerexpiration":[],"class_list":["post-346762","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-company-law","tag-act","tag-companies","tag-issue","tag-legal","tag-recourse","tag-rights"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Rights Issue under Companies Act 2013 \u2013 Legal Recourse - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=346762\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Rights Issue under Companies Act 2013 \u2013 Legal Recourse - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"This article aims to provide the readers complete information pertaining to the process of rights issue under the Companies Act 2013. \u201cRights Issue\u201d, in very simple term means issue of shares by a company to its existing equity shareholders in proportion to their existing share holding. It is a mechanism through which a company can [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fivemor.com\/?p=346762\" \/>\n<meta property=\"og:site_name\" content=\"Som2ny Network\" \/>\n<meta property=\"article:published_time\" content=\"2025-12-16T10:35:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"200\" \/>\n\t<meta property=\"og:image:height\" content=\"200\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/fivemor.com\/?p=346762#article\",\"isPartOf\":{\"@id\":\"https:\/\/fivemor.com\/?p=346762\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\/\/fivemor.com\/#\/schema\/person\/b85e3c3dc0e1daea076524dc8810c371\"},\"headline\":\"Rights Issue under Companies Act 2013 \u2013 Legal Recourse\",\"datePublished\":\"2025-12-16T10:35:47+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/fivemor.com\/?p=346762\"},\"wordCount\":768,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/fivemor.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/fivemor.com\/?p=346762#primaryimage\"},\"thumbnailUrl\":\"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg\",\"keywords\":[\"Act\",\"Companies\",\"Issue\",\"Legal\",\"Recourse\",\"Rights\"],\"articleSection\":[\"Company Law\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/fivemor.com\/?p=346762#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/fivemor.com\/?p=346762\",\"url\":\"https:\/\/fivemor.com\/?p=346762\",\"name\":\"Rights Issue under Companies Act 2013 \u2013 Legal Recourse - Som2ny Network\",\"isPartOf\":{\"@id\":\"https:\/\/fivemor.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/fivemor.com\/?p=346762#primaryimage\"},\"image\":{\"@id\":\"https:\/\/fivemor.com\/?p=346762#primaryimage\"},\"thumbnailUrl\":\"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg\",\"datePublished\":\"2025-12-16T10:35:47+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/fivemor.com\/?p=346762#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/fivemor.com\/?p=346762\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/fivemor.com\/?p=346762#primaryimage\",\"url\":\"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg\",\"contentUrl\":\"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg\",\"width\":200,\"height\":200},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/fivemor.com\/?p=346762#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/fivemor.com\/?bp_activities=1\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Rights Issue under Companies Act 2013 \u2013 Legal Recourse\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/fivemor.com\/#website\",\"url\":\"https:\/\/fivemor.com\/\",\"name\":\"Som2ny Network\",\"description\":\"Daily Deals\",\"publisher\":{\"@id\":\"https:\/\/fivemor.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/fivemor.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/fivemor.com\/#organization\",\"name\":\"Som2ny Network\",\"url\":\"https:\/\/fivemor.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/fivemor.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/fivemor.com\/wp-content\/uploads\/2026\/07\/4a0953c4-logo-300x86-1.png\",\"contentUrl\":\"https:\/\/fivemor.com\/wp-content\/uploads\/2026\/07\/4a0953c4-logo-300x86-1.png\",\"width\":300,\"height\":86,\"caption\":\"Som2ny Network\"},\"image\":{\"@id\":\"https:\/\/fivemor.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/fivemor.com\/#\/schema\/person\/b85e3c3dc0e1daea076524dc8810c371\",\"name\":\"admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/fivemor.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/729ae85bf62b9917e93538db2f2688ca?s=96&r=g&default=https%3A%2F%2Ffivemor.com%2Fwp-content%2Fplugins%2Fbuddypress-first-letter-avatar%2Fimages%2Fdefault%2F96%2Flatin_a.png\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/729ae85bf62b9917e93538db2f2688ca?s=96&r=g&default=https%3A%2F%2Ffivemor.com%2Fwp-content%2Fplugins%2Fbuddypress-first-letter-avatar%2Fimages%2Fdefault%2F96%2Flatin_a.png\",\"caption\":\"admin\"},\"sameAs\":[\"https:\/\/fivemor.com\"],\"url\":\"https:\/\/fivemor.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Rights Issue under Companies Act 2013 \u2013 Legal Recourse - Som2ny Network","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/fivemor.com\/?p=346762","og_locale":"en_US","og_type":"article","og_title":"Rights Issue under Companies Act 2013 \u2013 Legal Recourse - Som2ny Network","og_description":"This article aims to provide the readers complete information pertaining to the process of rights issue under the Companies Act 2013. \u201cRights Issue\u201d, in very simple term means issue of shares by a company to its existing equity shareholders in proportion to their existing share holding. It is a mechanism through which a company can [&hellip;]","og_url":"https:\/\/fivemor.com\/?p=346762","og_site_name":"Som2ny Network","article_published_time":"2025-12-16T10:35:47+00:00","og_image":[{"width":200,"height":200,"url":"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg","type":"image\/jpeg"}],"author":"admin","twitter_card":"summary_large_image","twitter_misc":{"Written by":"admin","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/fivemor.com\/?p=346762#article","isPartOf":{"@id":"https:\/\/fivemor.com\/?p=346762"},"author":{"name":"admin","@id":"https:\/\/fivemor.com\/#\/schema\/person\/b85e3c3dc0e1daea076524dc8810c371"},"headline":"Rights Issue under Companies Act 2013 \u2013 Legal Recourse","datePublished":"2025-12-16T10:35:47+00:00","mainEntityOfPage":{"@id":"https:\/\/fivemor.com\/?p=346762"},"wordCount":768,"commentCount":0,"publisher":{"@id":"https:\/\/fivemor.com\/#organization"},"image":{"@id":"https:\/\/fivemor.com\/?p=346762#primaryimage"},"thumbnailUrl":"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg","keywords":["Act","Companies","Issue","Legal","Recourse","Rights"],"articleSection":["Company Law"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/fivemor.com\/?p=346762#respond"]}]},{"@type":"WebPage","@id":"https:\/\/fivemor.com\/?p=346762","url":"https:\/\/fivemor.com\/?p=346762","name":"Rights Issue under Companies Act 2013 \u2013 Legal Recourse - Som2ny Network","isPartOf":{"@id":"https:\/\/fivemor.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/fivemor.com\/?p=346762#primaryimage"},"image":{"@id":"https:\/\/fivemor.com\/?p=346762#primaryimage"},"thumbnailUrl":"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg","datePublished":"2025-12-16T10:35:47+00:00","breadcrumb":{"@id":"https:\/\/fivemor.com\/?p=346762#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/fivemor.com\/?p=346762"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/fivemor.com\/?p=346762#primaryimage","url":"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg","contentUrl":"https:\/\/fivemor.com\/wp-content\/uploads\/2025\/11\/cropped-cropped-s81-2.jpg","width":200,"height":200},{"@type":"BreadcrumbList","@id":"https:\/\/fivemor.com\/?p=346762#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/fivemor.com\/?bp_activities=1"},{"@type":"ListItem","position":2,"name":"Rights Issue under Companies Act 2013 \u2013 Legal Recourse"}]},{"@type":"WebSite","@id":"https:\/\/fivemor.com\/#website","url":"https:\/\/fivemor.com\/","name":"Som2ny Network","description":"Daily Deals","publisher":{"@id":"https:\/\/fivemor.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/fivemor.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/fivemor.com\/#organization","name":"Som2ny Network","url":"https:\/\/fivemor.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/fivemor.com\/#\/schema\/logo\/image\/","url":"https:\/\/fivemor.com\/wp-content\/uploads\/2026\/07\/4a0953c4-logo-300x86-1.png","contentUrl":"https:\/\/fivemor.com\/wp-content\/uploads\/2026\/07\/4a0953c4-logo-300x86-1.png","width":300,"height":86,"caption":"Som2ny Network"},"image":{"@id":"https:\/\/fivemor.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/fivemor.com\/#\/schema\/person\/b85e3c3dc0e1daea076524dc8810c371","name":"admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/fivemor.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/729ae85bf62b9917e93538db2f2688ca?s=96&r=g&default=https%3A%2F%2Ffivemor.com%2Fwp-content%2Fplugins%2Fbuddypress-first-letter-avatar%2Fimages%2Fdefault%2F96%2Flatin_a.png","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/729ae85bf62b9917e93538db2f2688ca?s=96&r=g&default=https%3A%2F%2Ffivemor.com%2Fwp-content%2Fplugins%2Fbuddypress-first-letter-avatar%2Fimages%2Fdefault%2F96%2Flatin_a.png","caption":"admin"},"sameAs":["https:\/\/fivemor.com"],"url":"https:\/\/fivemor.com\/?author=1"}]}},"_links":{"self":[{"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/posts\/346762","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=346762"}],"version-history":[{"count":0,"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/posts\/346762\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/media\/322809"}],"wp:attachment":[{"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=346762"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=346762"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=346762"},{"taxonomy":"dealstore","embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fdealstore&post=346762"},{"taxonomy":"offerexpiration","embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fofferexpiration&post=346762"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}