Companies issue shares as a means of raising additional capital to fund business operations or take up new investments. Public companies need approval from their shareholders before issuing shares.
In India, Companies Act, 2013 discusses the procedure of allotment of shares and it is read with Companies (Prospectus and Allotment of Securities) Rules, 2014.
Section 23 of the Companies Act, 2013 discusses the option to issue shares. In order to issue share the company needs to be a registered company. There are four ways in which shares can be issued:
- Public issue (includes Initial Public Offering and Further Public Offering)
- Private Placement
- Rights issue
- Bonus issue
Where a Public company can issue shares through Public Issue, Private Placement, Rights issue or Bonus issue, a Private Company may issue shares by way of Rights issue or Bonus issue and Private Placement.
A share issuance requires
- Issuing a prospectus
- Increase Authorised capital. Filling required Forms with ROC and taken approval.
- Changes on MOA.
- Receiving application of shares
- Allotment of shares and a call on shares
- Post allotment Issue Share Certificate
- Comply formalities with Stock Exchanges and SEBI ( in case of Listed Company)
By issuing debentures means issue of a certificate by the company under its seal which is an acknowledgment of debt taken by the company. The procedure of issue of debentures by a company is similar to that of the issue of shares. A Prospectus is issued, applications are invited, and letters of allotment are issued.
Debenture is most important instrument and method of raising the loan capital by the company. A debenture is like a certificate of loan or a loan bond evidencing the fact that the company is liable to pay a specified amount with interest and although the money raised by the debentures becomes a part of the company's capital structure, it does not become share capital.
Our Expert professionals make the entire Share and Debenture issue procedure easy and make you smoothly comply all rules and legal formalities.