Section 083

Further issue of capital.—(1) Where the directors decide to increase share capital of the company by issue of [1][further shares], such shares shall be offered:

(a) to persons who, at the date of the offer, are members of the company in proportion to the existing shares held by [2][such members through] sending a letter of offer subject to the following conditions, namely—

(i) the shares so offered shall be strictly in proportion to the shares already held in respective kinds and classes;

(ii) the letter of offer shall state the number of shares offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined;

(iii) in the case of a listed company any member, not interested to subscribe, may exercise the right to renounce the shares offered to him in favour of any other person, before the date of expiry stated in the letter of offer; and

(iv) if the whole or any part of the shares offered under this section is declined or is not subscribed, the directors may allot such shares in such manner as they may deem fit within a period of thirty days from the close of the offer as provided under sub-clause (ii) above or within such extended time not exceeding thirty days with the approval of the Commission;

[3][Proviso Omitted].

(b) [4][In case of public company and subject to approval of the Commission, to any person on the basis of a special resolution either for cash or for consideration other than cash:

Provided that the value of any non-cash asset, net worth of undertaking, service, benefit or intellectual property shall be determined by a valuer.]

[5](c) in case of a private company and subject to its articles and special resolution, to any person, either for cash or for consideration other than cash on such conditions and requirements as may be notified.]

(2) The letter of offer referred to in sub-clause (ii) of clause (a) of subsection (1) [6][shall be] duly signed by at least two directors [7][and] dispatched through registered post or courier or through electronic mode to all the existing members, ensuring that it reaches the members before the commencement of period for the acceptance of offer.

[8][(3) The letter of offer, referred to in sub-section (2) shall be accompanied by a circular duly signed by all directors or an officer of the company authorised by them in this behalf on such form as may be specified containing material information about the affairs of the company, latest statement of the accounts and the necessity for issue of further capital:

Provided that a copy of such circular shall also be filed with the registrar simultaneously at the time it is dispatched to the shareholders.]

(4) Notwithstanding anything contained in this section, where [9][any loan or finances have] been obtained from any Government by a public sector company, and if that Government considers it necessary in the public interest so to do, it may, by order, direct that such loan or [10][finances or] any part thereof shall be converted into shares in that company, on such terms and conditions as appear to the Government to be just and reasonable in the circumstances of the case even if the terms of such loan [11][or finances]  do not include the option for such conversion.

(5) In determining the terms and conditions of conversion under subsection (4), the Government shall have due regard to the financial position of the public sector company, the terms of the rate of interest [12][or profit] payable thereon and such other matters as it may consider necessary.

(6) Notwithstanding anything contained in this Act or any other law for the time being in force or the memorandum and articles, where the authorized capital of a company is fully subscribed, or the un-subscribed capital is insufficient, the same shall be deemed to have been increased to the extent necessary for issue of shares to the Government, a scheduled bank or financial institution in pursuance of any obligation of the company to issue shares to such scheduled bank or financial institution.

(7) In case shares are allotted in terms of sub-section (6), the company shall be required to file the notice of increase in share capital along with the fee prescribed for such increase with the registrar within the period prescribed under this Act:

Provided that where default is made by a company in complying with the requirement of filing a notice of increase in the authorised capital under this Act as well as the fee to be deposited on the authorised capital as deemed to have been increased, the Government, scheduled bank or the financial institution to whom shares have been issued may file notice of such increase with the registrar and such notice shall be deemed to have been filed by the company itself and the Government, scheduled bank or financial institution shall be entitled to recover from the company the amount of any fee paid by it to the registrar in respect of such increase.

(8) Any violation of this section shall be an offence liable to a penalty of level 2 on the standard scale.

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RELEVANT FORM

[1] Substituted through Companies Amendment Act, 2021 dated 03-12-2021. Before substitution it was:

“further shares capital:

[2] Inserted through Companies Amendment Act, 2021 dated 03-12-2021

[3] Proviso omitted through Companies Amendment Act, 2021 dated 03-12-2021. Before omitted it was:

“Provided that a public company may reserve a certain percentage of further issue for its employees under ―Employees Stock Option Scheme‖ to be approved by the Commission in accordance with the procedure and on such conditions as may be specified”

[4] Substituted through Companies Amendment Act, 2021 dated 03-12-2021. Before substitution it was:

“(b) subject to approval of the Commission, to any person, in the case of public company on the basis of a special resolution either for cash or for a consideration other than cash:

Provided that the value of non-cash asset, service, intellectual property shall be determined by a valuer registered by the Commission.”

[5] Added through Companies Amendment Act, 2021 dated 03-12-2021

[6] Inserted through Companies Amendment Act, 2021 dated 03-12-2021

[7] Substituted through Companies Amendment Act, 2021 dated 03-12-2021. Before substitution it was: “shall be”

[8] Substituted through Companies Amendment Act, 2021 dated 03-12-2021. Before substitution it was:

“(3) A copy of the letter of offer, referred to in sub-section (2) shall, simultaneously with the dispatch to the members, be sent to the registrar.

[9] Substituted through Companies Amendment Act, 2021 dated 03-12-2021. Before substitution it was: “loan has”

[10] Inserted through Companies Amendment Act, 2021 dated 03-12-2021.

[11] Substituted through Companies Amendment Act, 2021 dated 03-12-2021. Before substitution it was: “does”

[12] Inserted through Companies Amendment Act, 2021 dated 03-12-2021