Procedure of Issue of Shares in India

हिंदी में पढ़ें
June 24, 2019
By Advocate Chikirsha Mohanty

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.

Connect with an expert lawyer for your legal issue

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:

  1. Public issue (includes Initial Public Offering and Further Public Offering)

  2. Private Placement

  3. Rights issue

  4. 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.

In case of a Public issue the procedure is as follows:

Issuing the prospectus:

Section 26(1) deals with procedure of matter should be stated in the prospectus. A prospectus bears an open invitation to public to buy shares of the company. SEBI (Securities Exchange Board of India) is the regulator and thus a copy of the company’s prospectus needs to be submitted before the publication date.

The prospectus gives brief information about the company, like:

Consult: Top Corporate Lawyers in India

  1. Name of the directors
  2. Past Performance (including Reports of the company)

  3. Terms of issue

  4. Type of investment (for raising capital)

Apart from these details opening and closing dates of share issue, application form, application fees, allotment and call-on dates, minimum shares for application and bank details for deposit are provided in prospectus.

The Registrar after ensuring compliance will register the prospectus.

Application of shares:

After invitation, application can be submitted through prescribed form along with application fee before closing date mentioned in prospectus. Allotment of shares is done with the selected applicants and rest of applicants receive regret letters. Share certificates are issued after the allotment is done.

Connect with an expert lawyer for your legal issue

Call on shares:

Call on shares is a way to collect remaining shares after application and allotment as per the provisions of the prospectus. There’s first call, second call, etc. depending on the number of instalments.

In case of a Private Placement the procedure is as follows:

In case of Private Placement, a Private Placement Offer Letter is issued. Section 42 of Companies Act, 2013 discusses this provision and it should be read with Rules. Number of allotments of shares is limited and rules are laid down for the same. No company offering securities shall release any public advertisements or utilise any marketing agents, etc. to inform the public at large about the offer. Return of allotment has to be filed which should include a complete list of all security-holders.

Apart from this procedure which has been simplified, there are many technicalities attached with the same and therefore it should be taken care of with the help consultation from an experienced lawyer.


These guides are not legal advice, nor a substitute for a lawyer
These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.

Googling your legal issue online?

The internet is not a lawyer and neither are you.
Talk to a real lawyer about your legal issue.

Popular Corporate Lawyers

Advocate Rajesh Rai
Sector-19, Dwarka, Delhi
19 years Experience
Advocate Sunil Kumar Bakshi
Sector-16, Faridabad
32 years Experience
Advocate Bala Janaki
330 Thambuchetty Street, Chennai
34 years Experience
Advocate Prerna Oberoi
Sector 41, Noida
7 years Experience

Related Articles

Connect with top Corporate lawyers for your specific issue

Corporate Law Articles

​All you need to know about the Personal Data Protection Bill, 2018

Decoding the concept of a Private Limited Company

Winding up of Company under Companies Act 2013

Contract Forensic - A Seed to Business Investments

User Reviews

4.5 - 23 reviews

company not releasing revenue on shares what to do

Deepak on Nov 17, 2019

how to file a complaint against company?

Sagar on Nov 09, 2019

how can I make my private company public

Nagesh on Nov 09, 2019

Nice one. Also tell about purchase of share

Divya on Nov 16, 2019

please refer a company lawyer for my case

Bhanu on Nov 01, 2019

Good work with the article.

Sachin on Nov 06, 2019

can you share your helpline number

Akanksha on Nov 22, 2019

The writer has explained the law perfectly.

Amol on Oct 26, 2019

Tells all the legalities about the subject. Good work.

Vinayak on Nov 21, 2019

how to contact a lawyer?

Bhanu on Dec 03, 2019

good article. Very helpful

Satya on Nov 04, 2019

good advice. Who can I contact for my legal issue?

Raman on Nov 10, 2019

good article. Can you share more detail

Raju on Nov 25, 2019

nice work. Learned a lot. Thanks

Mayur on Nov 18, 2019

nice work with the article.

Richa on Nov 05, 2019

solved my queries.

Priti on Nov 28, 2019

nice article. Good legal advice

Divya on Nov 01, 2019

very detailed and informative

Praveen on Oct 30, 2019

thanks for the information

Geeta on Oct 31, 2019

it’s a very good article

Ajith on Nov 11, 2019

thank you for the article

Kiran on Nov 09, 2019

Good work with the article. Solved all my legal queries. Regards.

Nandini on Nov 19, 2019

very helpful and detailed

Shalini on Oct 28, 2019