Cardiff Services

Right Issues

Overview – Rights Issue of Shares

A Rights Issue is a method by which a company raises additional capital by offering its existing shareholders the right to purchase additional shares at a discounted price, in proportion to their existing holdings. This is a preferred route for companies looking to strengthen their capital base without diluting control to outsiders.

 

Under Section 62(1)(a) of the Companies Act, 2013, a Rights Issue allows a company—whether listed or unlisted—to offer new shares to its current shareholders before offering them to the public. It is considered a shareholder-friendly and transparent way of raising funds, ensuring that existing shareholders maintain their percentage of ownership if they choose to subscribe.

 

At Cardiff Services, we help companies execute rights issues end-to-end—right from drafting offer letters, handling board and shareholder approvals, filing with the Registrar of Companies (RoC), and ensuring timely allotment of shares in compliance with all regulatory norms.

Features – Rights Issue of Shares

A Rights Issue is one of the most effective and shareholder-friendly ways for a company to raise additional equity capital. It gives existing shareholders the “right but not the obligation” to purchase additional shares before the company offers them to others. At Cardiff Services, we help businesses structure and execute rights issues seamlessly, ensuring full legal and regulatory compliance.

  • Proportional Offer to Existing Shareholders
    Shares are offered in proportion to current shareholding (e.g., 1:2 rights issue means 1 new share for every 2 shares held).
  • Discounted Pricing
    Shares are usually offered at a price lower than the market value or intrinsic value, making it attractive for existing shareholders.
  • Retention of Ownership & Control
    Shareholders can maintain their percentage of ownership and voting rights by exercising their rights.
  • Non-Dilutive (If Fully Subscribed)
    If all shareholders subscribe to their entitlements, there is no dilution of promoter or shareholder control.
  • Flexible Structure
    Companies can design the offer terms including issue ratio, price, and record date as per their financial needs and shareholder profile.
  • Quick Capital Raising Tool
    Compared to public issues or private placements, rights issues are quicker and involve fewer regulatory formalities (especially for private companies).
  • Transferable Rights (for listed companies)
    In listed entities, rights are renounceable—shareholders can sell their rights entitlements to others in the open market.
  • Regulatory Compliance Required
    Involves procedures under Section 62(1)(a) of the Companies Act, 2013, along with necessary board/shareholder resolutions and filings (like PAS-4, MGT-14, PAS-3).
  • No Minimum Subscription Requirement (for Private Companies)
    Private companies may raise funds without needing a minimum subscription threshold, making it simpler and faster.

With Cardiff Services, your Rights Issue is handled professionally from start to finish—with accurate drafting, statutory filings, timeline management, and full regulatory compliance.

Documents Required – Rights Issue of Shares

Executing a Rights Issue under Section 62(1)(a) of the Companies Act, 2013 requires a well-structured documentation process to ensure transparency, shareholder protection, and regulatory compliance. At Cardiff Services, we assist with drafting, reviewing, and filing all necessary documents required for a smooth and legally compliant rights issue.

  • Notice of Board Meeting
    For approving the rights issue and calling an Extraordinary General Meeting (if required).
  • Board Resolution
    Approving:

  • The rights issue offer

  • Draft offer letter (PAS-4)

  • Issue price, ratio, and record date

  • Opening and closing dates of the offer

  • Offer Letter (Form PAS-4)
    Formal offer document containing the details of the issue such as:

  • Rights entitlement

  • Number of shares offered

  • Price and payment terms

  • Terms of renunciation (if any)

  • Shareholder Resolution (if articles require or issue exceeds limits)
    Passed via general meeting (EGM) authorizing the Board to proceed with the rights issue, especially if it alters share capital significantly.
  • List of Shareholders with Entitlements
    Prepared as on the record date, indicating how many shares each shareholder is entitled to under the rights issue.
  • Renunciation Letter/Form (if applicable)
    Allows shareholders to renounce their rights entitlement in favor of another person (usually applicable in private companies too).
  • Proof of Dispatch of Offer Letters
    Evidence that offer letters were sent to all eligible shareholders (via registered post, email, or hand delivery).
  • Allotment Sheets and Share Application Forms
    Collected from shareholders indicating acceptance, renunciation, or rejection of the rights offer.
  • Board Resolution for Allotment of Shares
    Once the offer period closes, the Board must approve the allotment of shares based on subscriptions received.
  • Form PAS-3 (Return of Allotment)
    Filed with the Registrar of Companies (RoC) within 15 days of allotment, along with the list of allottees and related details.
  • Updated Register of Members & Share Certificates (if physical)
    For recording new allotments and issuing share certificates (if not in demat form).

With Cardiff Services, you can trust that every document—from offer letter to RoC filings—is professionally handled, reducing compliance risk and saving time.

Procedure – Rights Issue of Shares

The Rights Issue process under Section 62(1)(a) of the Companies Act, 2013 enables companies to raise capital from existing shareholders in a structured and compliant manner. At Cardiff Services, we ensure every step of the rights issue is executed smoothly, with full legal and procedural accuracy.

Step 1: Board Meeting – Approval of Rights Issue

  • Convene a Board Meeting to:

    • Approve the rights issue

    • Decide the issue price, ratio, record date, and timelines

    • Approve the draft Offer Letter (PAS-4)

    • Fix the date for an Extraordinary General Meeting (EGM) (if required)

Step 2: Hold Shareholders’ Meeting (if required)

  • If the Articles of Association or the quantum of issue require shareholder approval:

    • Convene an EGM

    • Pass a special resolution or ordinary resolution under Section 62(1)(a)

Step 3: Prepare Offer Letter (Form PAS-4)

  • Draft the Offer Letter containing:

    • Number of shares offered

    • Issue price

    • Terms of payment

    • Last date for acceptance/renunciation

    • Right to renounce (if allowed)

Cardiff ensures PAS-4 is legally compliant and ready for dispatch.

Step 4: Dispatch Offer Letters

  • Send the Offer Letters to all existing shareholders (registered addresses or email)

  • Maintain proof of dispatch (registered post, hand delivery, or email with acknowledgment)

Step 5: Receive Applications and Allotment Money

  • Collect share applications and payment within the offer period (minimum 15 days, maximum 30 days unless shareholders agree otherwise)

Step 6: Board Meeting – Allotment of Shares

  • After the offer period ends, convene a Board Meeting to:

    • Approve the allotment of shares

    • Record the acceptance, renunciation, and rejection (if any)

Step 7: File Return of Allotment (Form PAS-3)

  • File Form PAS-3 with the Registrar of Companies (RoC) within 15 days of allotment

  • Attach the list of allottees and other required documents

Step 8: Issue Share Certificates or Update Demat Records

  • Issue physical share certificates within 2 months (if applicable), or

  • Instruct the Depository Participant (DP) to credit shares in demat form

Step 9: Update Statutory Registers

  • Update:

    • Register of Members

    • Register of Allotments

    • Minutes Books

Step 10: Post-Issue Compliance Review

  • Cardiff conducts a final compliance audit to ensure all filings, resolutions, and allotments meet the statutory requirements.

With Cardiff Services, your Rights Issue is handled end-to-end—from structuring the offer to final RoC filings—ensuring legal accuracy, timely execution, and complete peace of mind.

Frequently Asked Questions

A company name search ensures that your chosen business name is unique, legally compliant, and not already registered with Companies House UK. It helps you avoid legal disputes, trademark issues, and confusion in the Cardiff business market.

If your desired name is already registered, you’ll need to choose a different name or modify it. Using a taken name could result in rejection by Companies House or potential legal issues. Our experts can help you brainstorm alternative names that are compliant and market-ready.

It’s not advisable to use a name that’s too similar to another company, especially within the same industry. Similar names can confuse customers and risk trademark disputes. A company name search helps you identify these risks early.

For a company name search in Cardiff, you may need:

  • Proposed company name

  • Business entity type (Ltd, LLP, Partnership, etc.)

  • Jurisdiction (Cardiff / UK)

  • Owner or shareholder details (if applicable)

  • Business description

A “high probability” result means your proposed company name is likely to be available, but further checks are recommended. This is why our detailed Cardiff Company Name Search Report includes both identical and similar names for clarity.

Certain words are restricted under UK law (e.g., “bank,” “insurance,” “government”). If you want to use them, you’ll need special approval from regulatory bodies. We guide you through this process if your Cardiff business requires such terms