Chapter IV
Section 62 (1-4) &
Rule 12 & 13
Companies Act 2013
 Further Issue / Allotment can be made to……..
Existing Share
Holders
In
proportion
to their
existing
share
holding
Issue of employee
stock options
To employees under
a scheme of
employees’ stock
option
& Subject to Rule-12
& Special Resolution
Issue of Shares on
preferential basis
To any other person
& Subject to Rule 13
& Comply Section 42
•
Issue of shares to
• Employees i.e ESOP &
• Directors as Sweat Equity Shares
• Bonus Issue / Right Isse to
existing share holders
Will be
dealt
separately
under the
respective
provisions
of the Act
Return of allotment in Form No. PAS- 3 needs to be submitted
 Further Issue / Allotment to Existing Share Holders in
proportion to their existing share holding……………
• Send Letter of Offer / Notice **
Specifying Time Limit
Not Less than 15 days & Not more than 30 days
If offer is not accepted
It is deemed that it is decline
After expiry of Specified Time Limit
• Offeree
can
renounce
his right
Or if offeree declines the offer
Board of Directors may dispose of them in
such manner which is not dis-advantageous
to the shareholders and the company
** Notice can be sent by Registered post / Speed post / Electronic Mode

Eligibility Criteria
working in India or outside India

Permanent Employee
Of Subsidiary / Holding / Associate Company
working in India / out side India

Director
Excluding Independent Director
Exclude Following
• an employee who is a promoter or a person belonging to the promoter group
• a director directly or indirectly, holds more than 10% of the outstanding equity shares
Brief Conditions of Rule for ESOP
• Special Resolution by share holders
• Approval by separate Resolution for
Grant of option to employees of subsidiary /holding company
Grant of option to Identified Employees equal to / exceeding 1%
of issued capital
• Variation in terms – Special Resolution required
• The company shall have the freedom to specify the lock-in period
• Rights Restricted - to receive dividend / to vote or / enjoy the benefits of a
shareholder in respect of option granted to them --- till shares are issued on
exercise of option
•The option granted to employees shall not be transferable
• Maintain Register of Employee Stock Options in Form No. SH.6
• Disclosure in Directors Report
Rule 13. Section 62 (1) (C) Issue of shares on Preferential Basis
Issue on preferential basis should also comply with conditions laid down
in section 42 of the Act
Brief Conditions –
• authorized by its Articles of Association
• Special Resolution passed in a general meeting
• For cash or for consideration other than cash --- valuation
report of a registered valuer giving justification for valuation
• Securities allotted by way of preferential offer shall be made
fully paid up at the time of their allotment
•The allotment shall be completed within a period of 12 months
- If Not completed within 12 month --- ANOTHER
SPECIAL RESOLUTION will require to complete allotment