Board Resolution: Preferential Allotment of Shares
Recommend an issue of shares to identified persons on a preferential basis, with the price backed by a valuation report.
What it is
A preferential allotment is an issue of shares to selected persons, other than by rights or bonus, under Section 62(1)(c) of the Companies Act, 2013 read with Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014, and, for private placements, Section 42. The price must be determined by a valuation report of a registered valuer. The members approve the issue by special resolution, and the allotment must be completed within 12 months of the resolution.
When it is used
- Issuing shares to a new investor.
- Converting a loan into equity.
- Issuing shares to a strategic partner.
What the template covers
- Company name, CIN and meeting details
- Allottee name, category, PAN and address
- Class and number of shares
- Face value and issue price
- Valuation and lock-in
- Recommendation to members and authorisation
Details you will need
The generator asks for the following. Fields marked with an asterisk in the form are required; the rest can be left blank and filled in later in Word.
Company
Company Name; CIN; Registered Office
Meeting
Board Meeting Date; Place
Allottee
Name of Allottee; Category of Allottee; PAN; Address
Issue
Type of Share; No. of Shares to Allot; Face Value per Share (₹); Issue Price per Share (₹); Total Consideration (₹)
Compliance
Valuation by; Lock-in Period
Authentication
Chairman Name; Chairman DIN
Stamp duty, registration and filing
The explanatory statement to the special resolution contains the disclosures in Rule 13. Where the offer is a private placement, Section 42 and Form PAS-4 also apply, with money received from the allottee's bank account. The return of allotment in Form PAS-3 is filed within 15 days. Shares issued above fair market value to residents may have income-tax consequences, and issues to non-residents follow FEMA pricing guidelines.
Generate the BR — Preferential Allotment of Shares
Fill in the form and download the draft as a Word file. It is a general template, not legal or professional advice; have it reviewed for your facts before you sign or rely on it.
Need this checked against your facts, or the registration or filing that follows (e.g. the related MCA e-form)? Contact SKAG and Associates
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Frequently asked questions
Is a valuation report mandatory for preferential allotment?
Yes, from a registered valuer, under Rule 13.
How long is the special resolution valid?
Allotment must be completed within 12 months of the special resolution.
Does Section 42 also apply?
Where the preferential offer is made through private placement, Section 42 and its rules also apply.
This page gives general information for reference only. Laws, stamp duty rates and filing requirements change and differ between States, so confirm the current position for your case. Related: all document templates · free tax calculators · compliance calendar and guides.