Section 62 of the Companies Act, 2013
Section 62 of the Companies Act, 2013 deals with the Further Issue of Share Capital by a company.
🏢 Section 62 – Further Issue of Share Capital
This section outlines how a company can issue additional shares after its initial capital is raised, and who gets the right to subscribe to those new shares.
(1) Rights Issue (Existing shareholders get the first right)
If a company wants to increase its subscribed share capital by allotting further shares, it must first offer them to:
Existing equity shareholders,
In proportion to their current holding (this is called rights issue),
Via a letter of offer, valid for a minimum of 15 days and a maximum of 30 days.
✅ If the shareholder doesn’t accept the offer in that period, it’s considered declined.
(1)(b) Employees – ESOP
The company can issue shares to its employees under a scheme of Employees Stock Option (ESOP), by passing a special resolution and following prescribed rules.
(1)(c) Any Other Person – Preferential Allotment
Shares can be offered to any person (whether they are existing shareholders or not), if a special resolution is passed and conditions prescribed by Rule 13 of Companies (Share Capital and Debentures) Rules, 2014 are followed.
🔁 Convertible Instruments
If a company issues debentures or loans that are convertible into shares, the conversion must also be approved by a special resolution before the issue.
📝 Key Compliance Points:
Special resolution is required for preferential issue or ESOPs.
Offers to existing shareholders must follow proper procedure and timeline.
SEBI regulations must be followed for listed companies.
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