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Issuing shares is a regulated corporate action governed by the Companies Act, 2013 (Sections 39, 42, 62 & 63 read with the Companies (Prospectus and Allotment of Securities) and Companies (Share Capital and Debentures) Rules, 2014). A company can issue fresh shares through a rights issue (Section 62(1)(a)), a preferential allotment (Section 62(1)(c)), a private placement (Section 42), an ESOP (Section 62(1)(b)), or a bonus issue (Section 63). Every allotment must be reported in Form PAS-3 within 30 days (15 days for a private placement). eFileSeva helps companies issue shares legally and compliantly — from the offer letter and valuation report to the allotment and MCA filing.

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Key Details for Issue of Shares

eFileSeva provides complete assistance for issuing shares — selecting the correct route, drafting the offer letter and resolutions, obtaining the valuation report, managing the separate bank account, and filing Form PAS-3 with the MCA — across private, public, One Person, and Section 8 companies.

# Topic Details
1 Choose the Right Route Selecting the correct route — rights issue, preferential allotment, private placement, ESOP, or bonus issue — is the first step. eFileSeva helps you choose based on who the shares are for, the pricing, and your fundraising or employee-compensation goals.
2 Issue Timeline
  • Rights issue: Offer window of 15–30 days, PAS-3 within 30 days of allotment*
  • Private placement / preferential: PAS-3 within 15 days of allotment*
  • Allotment must be completed within 60 days of receiving application money
3 Issue Cost The cost comprises the government filing fees for the applicable forms (PAS-3, MGT-14, etc.), stamp duty on the share certificates, and professional fees. eFileSeva provides transparent pricing with no hidden charges and professional assistance throughout the process.
4 Authorized Capital Headroom The company must first have sufficient authorized share capital to accommodate the new shares. If the authorised ceiling is insufficient, it must be increased first via an ordinary resolution and Form SH-7.
5 Board & Shareholder Approval A rights issue requires only a board resolution (Section 62(1)(a)). A preferential allotment or a private placement requires a special resolution (75%). A bonus issue is by an ordinary resolution at a general meeting.
6 Key Forms PAS-3 (return of allotment), PAS-4 (private placement offer letter, serially numbered), PAS-5 (record of offers), MGT-14 (special resolution), and SH-1 (share certificate).
7 Form PAS-3 & Penalty Form PAS-3 (return of allotment) must be filed within 30 days of allotment (within 15 days for a private placement). Late filing attracts an additional fee and a penalty of ₹1,000/day up to ₹25 lakh for the company, its promoters, and directors (Section 42).
8 Post-Issue Services After the issue, eFileSeva assists with:
  • PAS-3 Filing & Acknowledgement
  • Share Certificate Issuance (SH-1 / Demat)
  • Register of Members Update (MGT-1 / Section 88)
  • MGT-14 Filing for Resolutions
  • Handling MCA Queries & Notices
  • Ongoing Corporate Compliance Support

*Timelines may vary depending on the route, document completeness, and MCA processing.

Issue of Shares in India: Everything You Need to Know

September 1, 2026 Edited by eFileSeva Team

Issue Shares Legally & Compliantly

Under the Companies Act, 2013, a company increases its issued share capital by issuing further shares. Section 62 governs the issue of further shares through three routes: a rights issue under Section 62(1)(a) offered to existing shareholders in proportion to their holding, an employee stock option scheme (ESOP) under Section 62(1)(b), and a preferential allotment under Section 62(1)(c) to identified persons.

A rights issue must offer shares to existing equity shareholders proportionally, with a window of 15–30 days, and requires only a board resolution. A preferential allotment requires a special resolution and a valuation report from an IBBI-registered valuer. A private placement under Section 42 is the route for issuing securities of any type (including non-convertible debentures) to a select group — capped at 200 persons per financial year per security type — and requires a PAS-4 offer letter, a separate bank account, and a special resolution.

For a private placement, application money must be received only by cheque, demand draft, or banking channel — never cash — into a separate dedicated bank account. Shares must be allotted within 60 days of receiving the money; if not, the money must be refunded within 15 days, failing which it carries 12% interest per annum. Amounts cannot be utilised until allotment is complete and PAS-3 is filed. Every allotment is reported in Form PAS-3 within 30 days (15 days for a private placement), and share certificates are issued within 2 months.

eFileSeva helps you choose the correct route, obtain the valuation report, draft the offer letter and resolutions, manage the separate bank account, complete the allotment within 60 days, and file Form PAS-3 — making your issue of shares simple, fast, and fully compliant.

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Disclaimer

eFileSeva is a professional corporate compliance consultancy and service provider. We are not the Ministry of Corporate Affairs or the Registrar of Companies and do not allot shares or approve share issues. All allotments, registrations, and acknowledgements are issued solely by the MCA, ROC, and the respective government authorities. Our role is to assist clients with consultation, documentation, application filing, and end-to-end process support.

Ways to Issue Shares Under the Companies Act, 2013

Each route for issuing shares serves a different purpose and carries distinct rules. The correct route depends on who the shares are for, the pricing, and your fundraising or employee-compensation goals. eFileSeva helps you identify the correct route and complete the process with expert guidance.

Rights Issue

Under Section 62(1)(a) — offering shares to existing equity shareholders in proportion to their holding, with a 15–30 day acceptance window. Requires only a board resolution and no valuation report. Preserves ownership ratios.

Learn More

Preferential Allotment

Under Section 62(1)(c) — issuing shares or equity-convertible securities to identified persons, including non-shareholders. Requires a special resolution (75%) and a valuation report from a registered valuer, with allotment within 12 months.

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Private Placement

Under Section 42 — offering securities of any type (including NCDs) to a select group, capped at 200 persons per financial year per security type. Requires a PAS-4 offer letter, a separate bank account, and a special resolution.

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Employee Stock Options

Under Section 62(1)(b) — issuing shares to qualifying employees and directors under an ESOP scheme. Requires shareholder approval (special resolution, or an ordinary resolution for private companies) and maintenance of the ESOP register in Form SH-6.

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Bonus Issue

Under Section 63 — converting reserves or free reserves into fully paid shares and issuing them to existing members proportionally. Requires an ordinary resolution at a general meeting, and cannot be made in lieu of a dividend.

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Sweat Equity

Under Section 54 — issuing shares for consideration other than cash, to employees or directors for services or innovation. Requires a special resolution and a valuation report, and shares cannot be issued at a discount.

Learn More

Not Sure Which Route to Use to Issue Shares?

eFileSeva's experts will help you choose the most suitable route based on who the shares are for, the pricing, and your fundraising or employee-compensation goals.

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Eligibility / Minimum Requirements

Before issuing shares, you must meet a few basic eligibility and procedural requirements. eFileSeva helps you verify these requirements and complete the issue without delays.

Sufficient Authorized Capital

The company must have enough authorized share capital to accommodate the new shares. If the ceiling is insufficient, increase it first via an ordinary resolution and Form SH-7 before issuing the new shares.

Board & Shareholder Resolution

A rights issue requires only a board resolution. A preferential allotment or a private placement requires a special resolution (75%). A bonus issue is by an ordinary resolution at a general meeting. File Form MGT-14 within 30 days where a special resolution is passed.

Valuation Report (Where Required)
  • Mandatory for a preferential allotment (from an IBBI-registered valuer, Rule 13)
  • Justifies the offer price and must be dated before the board meeting
  • For FEMA cases, not older than 90 days from the allotment date
Offer Letter & 200-Person Cap

For a private placement, a serially-numbered PAS-4 offer letter must be addressed to each identified person and issued after the MGT-14 filing. The offer cannot exceed 200 persons per financial year per security type (QIBs and ESOP employees excluded).

Separate Bank Account & Banking Channel

Application money must be received only by cheque, demand draft, or banking channel — never cash — into a separate dedicated bank account in a scheduled bank, and cannot be utilised until allotment is complete and PAS-3 is filed.

60-Day Allotment Deadline

Shares must be allotted within 60 days of receiving the application money. If not, the money must be refunded within 15 days, failing which it carries 12% interest per annum from the 60th day. The company must not be in default on any statutory dues at the time of the issue.

Form PAS-3 Filing Within 30 Days

Form PAS-3 (return of allotment) must be filed with the ROC within 30 days of allotment (within 15 days for a private placement). Late filing attracts a penalty of ₹1,000 per day up to ₹25 lakh for the company, promoters, and directors.

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Documents Required for Issue of Shares

The required documents may vary depending on the route and your company structure. eFileSeva helps you verify and prepare all the necessary documents for a smooth process.

Company Documents
  • Company CIN, Certificate of Incorporation & MCA Master Data
  • Memorandum of Association (MOA) — current authorized capital (Clause V)
  • Articles of Association (AOA) — confirming the share issue & renunciation rights
  • Board Resolution approving the issue & convening the meeting
  • Shareholding Pattern / Current Register of Members
Offer & Resolution Documents
  • General Meeting Notice with the explanatory statement (Section 102)
  • Special Resolution (for preferential allotment / private placement)
  • Letter of Offer (rights issue) — with a 15–30 day acceptance window
  • Private Placement Offer Letter (Form PAS-4)
  • Record of Private Placement Offers (Form PAS-5)
Valuation & Allottee Documents
  • Valuation Report from an IBBI-registered valuer
  • List of Allottees with name, address, PAN & email
  • Ownership / Board Approval and Undertakings from each allottee
  • Bank Account Details for the dedicated private placement account
  • Proof of Application Money (cheque / DD / banking channel receipt)
MCA Forms, Fee & Post-Allotment
  • Form PAS-3 — Return of Allotment (filed by the company)
  • Form MGT-14 — Special Resolution Filing (if applicable)
  • Class-3 DSC of the authorized signatory (Director / CS)
  • Share Certificates (SH-1) / Demat credit & stamp duty proof
Pro Tip

First confirm the reason for the issue — a rights issue (existing shareholders), a preferential allotment / private placement (new or selected investors), or a bonus issue (rewarding shareholders). For a private placement, issue the serially-numbered PAS-4 offer letter only after the MGT-14 filing, accept money only via banking channels into a separate bank account, and do not utilise it until PAS-3 is filed. Allot within 60 days or refund within 15 to avoid 12% interest. File PAS-3 within 30 days (15 for private placement) to avoid the ₹1,000/day penalty up to ₹25 lakh. Remember that for a private placement there is no renunciation right, and the offer is capped at 200 persons per security type per financial year.

Timeline for Issue of Shares

eFileSeva simplifies the share issuance process with expert guidance at every stage. While timelines may vary depending on the route and on MCA processing, the following is a typical journey.

Step 1
Consultation & Route Selection

Our experts help you confirm the correct route — rights issue, preferential allotment, private placement, ESOP, or bonus — and estimate the cost and timeline for your company.

Step 2
Board Resolution & Valuation

We obtain the valuation report, draft and pass the board or shareholder resolution, and file MGT-14 within 30 days where a special resolution is required.

Step 3
Offer Letter & Subscription

We issue the PAS-4 offer letter (or rights letter of offer), open the separate bank account, and collect application money only via banking channels.

Step 4
Allotment & PAS-3 Filing

We complete the allotment within 60 days, file Form PAS-3 within 30 days (15 for a private placement), and issue share certificates within 2 months.

Estimated Issue Time

A standard issue of shares generally takes 2–3 months* from start to finish, including the general meeting notice and MCA processing. Allotment must be completed within 60 days of receiving application money, and Form PAS-3 must be filed within 30 days (15 days for a private placement) of allotment to avoid the ₹1,000/day penalty up to ₹25 lakh.

Process to Issue Shares in India

Issuing shares involves more than just filing a form. From identifying the correct route to the valuation report, the offer letter, the allotment, and the PAS-3 filing, eFileSeva provides complete support at every stage of your share issue.

01

Route Selection & Capital Check

We confirm the correct route — rights issue, preferential allotment, or private placement — verify the authorized capital headroom and the 200-person cap, and plan the pricing and share structure.

Turnaround: Same Day Consultation
02

Valuation & Resolutions

We obtain the valuation report from an IBBI-registered valuer (where required), prepare the general meeting notice with the explanatory statement, and pass the board or special resolution.

Turnaround: 3–5 Working Days
03

Offer Letter & Separate Bank Account

We issue the serially-numbered PAS-4 offer letter (or rights letter of offer) after the MGT-14 filing, open the separate bank account, and ensure application money is received only via banking channels.

Turnaround: 5–10 Working Days
04

Allotment Within 60 Days

We hold a board meeting to allot the shares within 60 days of receiving the application money, and prepare the list of allottees with their full details.

Turnaround: 2–5 Working Days
05

PAS-3 Filing & Post-Issue Support

We file Form PAS-3 within 30 days (15 for a private placement), issue share certificates or credit the demat account, and update the Register of Members.

Turnaround: 2–5 Working Days
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Filings Related to an Issue of Shares

Depending on the route and your company, you may need other filings alongside the PAS-3. eFileSeva helps you identify and complete the actions applicable to your company.

Filing / Registration When It May Apply Applicable Law / Authority
Form PAS-3 — Return of Allotment
Intimation to ROC of Share Allotment 		Filed by the company with the ROC within 30 days of allotment (within 15 days for a private placement), along with the list of allottees and the valuation report where relevant. Registrar of Companies Sections 39(4) & 42(8), Companies Act, 2013
Form PAS-4 — Offer Letter
Private Placement Offer Letter 		Issued to each identified person for a private placement or preferential allotment, serially numbered and addressed specifically, after the MGT-14 filing and within 30 days of recording the names. Company Rule 14(3), Companies (Prospectus and Allotment of Securities) Rules, 2014
Form PAS-5 — Record of Offers
Record of Private Placement Offers 		The company must maintain a complete record of all private placement offers in Form PAS-5, to be retained for compliance purposes. (Post-2018 amendment, filing with the ROC is no longer mandatory.) Company Records Rule 14(4), Companies (Prospectus and Allotment of Securities) Rules, 2014
Form MGT-14 — Resolution Filing
Special Resolution 		Filed within 30 days of passing the special resolution for a preferential allotment or a private placement, and for the board resolution for certain public company matters. Registrar of Companies Sections 179(3)(c) & 117, Companies Act, 2013
Share Certificate (SH-1) / Demat
Issuance of Share Certificates / Depository Credit 		Share certificates must be issued within 2 months of allotment (physical) or credited to the demat account immediately upon allotment, with stamp duty paid. Company / Depository Sections 46 & 56, Companies Act, 2013

Rights Issue vs Preferential Allotment vs Private Placement: What's the Difference?

These three routes for issuing shares are often confused. Compare the key differences below to identify the correct route for your situation.

Feature Rights Issue Preferential Allotment Private Placement
1. Who Can Receive Existing equity shareholders only (proportionally). Any identified person (including non-shareholders). Any identified person, on a select basis.
2. Governing Section Section 62(1)(a). Section 62(1)(c) read with Section 42. Section 42.
3. Instruments Equity and equity-convertible securities only. Equity and equity-convertible securities only. All securities, including non-convertible debentures.
4. Resolution Board resolution only. Special resolution (75%). Special resolution (75%).
5. Valuation Report Not required. Required (IBBI-registered valuer). Required (IBBI-registered valuer).
6. Offer Letter Letter of offer (15–30 day window). Form PAS-4 (unless to existing members only). Form PAS-4.
7. PAS-3 Deadline Within 30 days of allotment. Within 15 days of allotment. Within 15 days of allotment.

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Frequently Asked Questions

Find answers to common questions about issue of shares and maintaining compliance with eFileSeva.

The process depends on the route. A rights issue (Section 62(1)(a)) needs only a board resolution, while a preferential allotment (Section 62(1)(c)) or a private placement (Section 42) requires a special resolution, a valuation report, and an offer letter. Every allotment is reported in Form PAS-3.

A rights issue under Section 62(1)(a) offers shares to existing shareholders in proportion to their holding, preserving ownership ratios, and requires only a board resolution. A private placement under Section 42 offers securities to a select group, requires a special resolution and a PAS-4 offer letter, and is capped at 200 persons per security type.

Form PAS-3 is the return of allotment. It must be filed with the Registrar within 30 days of allotment for most routes, and within 15 days for a private placement. Late filing attracts a penalty of ₹1,000 per day up to ₹25 lakh.

A company can make a private placement offer to a maximum of 200 persons per financial year per class of security. Qualified institutional buyers (QIBs) and employees being offered shares under an ESOP scheme are excluded from this count.

For a private placement under Section 42(6), shares must be allotted within 60 days of the date of receipt of application money. If not, the money must be refunded within 15 days, failing which it attracts interest at 12% per annum.

A valuation report from an IBBI-registered valuer is mandatory for a preferential allotment (Section 62(1)(c)) and a private placement (Section 42), and for a sweat equity issue. A rights issue to existing shareholders does not require a valuation report.

No. Application money for a private placement must be received only by cheque, demand draft, or other banking channels — never in cash — and deposited into a separate dedicated bank account in a scheduled bank. The money cannot be utilised until allotment is complete and PAS-3 is filed.

Preferential allotment under Section 62(1)(c) is the issue of shares or equity-convertible securities to identified persons on a preferential basis. It requires a special resolution, a valuation report, and compliance with Section 42's private placement conditions. Non-convertible instruments are issued through the private placement route alone.

Late filing of Form PAS-3 attracts an additional MCA fee (ranging from 2 to 12 times the normal fee depending on the delay) and a penalty of ₹1,000 per day, which shall not exceed ₹25 lakh, for the company, its promoters, and directors in default.

Yes. eFileSeva can assist with route selection, valuation, resolutions, PAS-4/PAS-5, separately banked subscription, allotment, Form PAS-3 filing, and post-issue compliance — covering your entire share issue journey.

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