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Share Issue / Further Issue of Shares in India

A company may issue additional shares or other securities through different statutory routes depending on the purpose, investor group and security. Common routes include rights issue, preferential issue, private placement and employee stock options. CorporateWalla assists with share-issue planning, route selection, corporate approvals, documentation, allotment and applicable MCA filing support.

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Important: “Share issue” is an umbrella term. The correct statutory route must be identified before the company accepts subscription money or allots securities.

Share Issue Routes

Rights issue

A further issue to existing equity shareholders in proportion, as nearly as circumstances admit, to their existing paid-up equity share capital. Primary provision: Section 62(1)(a). See Rights Issue.

ESOP

Issue of shares pursuant to an employee stock option scheme for eligible persons. Primary provision: Section 62(1)(b), subject to applicable rules. See ESOP.

Preferential issue

Issue of shares or other securities to selected persons on a preferential basis. Primary provision: Section 62(1)(c) and applicable rules. See Preferential Allotment.

Private placement

An offer of securities to identified persons under Section 42 and applicable rules. A preferential issue can also interact with the private-placement framework where the statutory conditions apply. See Private Placement.

Bonus issue

A capitalisation of eligible reserves into fully paid bonus shares under the applicable Companies Act provisions. It is not a fundraising transaction because shareholders do not pay subscription money for the bonus shares.

When Does a Company Need a Fresh Share Issue?

Common situations include:

  • Raising equity capital
  • Bringing in strategic investors
  • Giving existing shareholders an opportunity to subscribe
  • Employee equity compensation
  • Converting eligible instruments into shares
  • Restructuring capital
  • Funding expansion
  • Strengthening the balance sheet

A share issue does not itself guarantee that the company will raise its targeted amount.

Share Issue vs Share Transfer

Share issue

New securities are created and allotted by the company. This can increase the company's issued/subscribed/paid-up capital.

Share transfer

Existing securities move from one shareholder to another. The company's share capital does not increase merely because an existing share is transferred. See Share Transfer.

Share Issue vs Authorised Capital Increase

These are different transactions.

Authorised capital increase: increases the maximum share capital the company is authorised to issue.

Share issue: actually creates and allots new securities.

A company may need to complete an authorised-capital increase before a proposed issue, but increasing authorised capital alone does not raise money or issue shares.

Share Issue to Foreign Investors

A non-resident investor can trigger additional FEMA/FDI requirements. Review:

  • Eligible instrument
  • Sectoral cap
  • Entry route
  • Pricing
  • Government approval, where applicable
  • Reporting
  • Downstream investment
  • Tax
  • Beneficial ownership

Depending on the transaction, reporting can include forms such as FC-GPR or other prescribed filings. See FEMA Compliance.

Listed-Company Share Issues

Listed companies may be subject to:

  • SEBI regulations
  • Stock-exchange requirements
  • Pricing rules
  • Disclosure requirements
  • Corporate-action procedures
  • Additional shareholder approvals

A listed-company transaction should not be processed using an unlisted-company checklist without reviewing the applicable SEBI framework.

Common Share-Issue Mistakes

Choosing the route after receiving money

The statutory structure should be determined before accepting subscription money.

Treating private placement as public fundraising

Private placement has restrictions on identified persons and solicitation.

Using a rights-issue document for a preferential issue

The routes have different approval and disclosure requirements.

Ignoring valuation

Pricing may be subject to Companies Act, FEMA, tax or SEBI requirements.

Forgetting authorised capital

The company must have sufficient authorised capital before relevant allotment.

Ignoring foreign investment rules

Non-resident investment can require separate pricing and reporting analysis.

Forgetting PAS-3

Return of allotment is a separate compliance step.

Treating a share transfer as a share issue

A transfer and fresh allotment have different legal and tax consequences.

Assuming funding is guaranteed

Compliance support does not guarantee investor participation or fundraising.

Share Issue Pricing

Share-issue services are scope-based. Fees can depend on:

  • Issue route
  • Number of investors/shareholders
  • Security type
  • Issue size
  • Valuation
  • Listed/unlisted status
  • FEMA
  • Existing documentation
  • Authorised-capital increase
  • Number of filings
  • Complex investment agreements
  • Ongoing cap-table administration

Government/MCA fees, stamp duty, valuation, legal and other third-party costs are shown separately where applicable.

Share Issue Timeline

The timeline depends on:

  • Route selection
  • Valuation
  • Board approval
  • Shareholder notice/meeting
  • Offer period
  • Investor documentation
  • Subscription
  • Allotment
  • MCA filing
  • FEMA/SEBI compliance

There is no single legally correct “share issue in X days” timeline for every transaction.

What Is Not Guaranteed

  • Fundraising amount
  • Investor participation
  • Shareholder subscription
  • Valuation acceptance
  • Regulatory approval
  • MCA filing acceptance without resubmission
  • FEMA/SEBI approval or acceptance
  • Tax outcome
  • Future share value

Transparent 3-tier pricing

Pick the speed and depth that matches your need. Same quality, same CA team — only the timeline changes.

Single Route

Custom quote

Timeline: Quoted on issue route and number of investors

Transaction review and route selection
MOA / AOA and authorised capital check
Board and shareholder approval documentation
Allotment documentation
PAS-3 and MGT-14 filing support
Valuation coordination
FEMA / FDI review for non-resident investors
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With Allotment

Custom quote

Timeline: Quoted on issue size, valuation and documentation

Transaction review and route selection
Board and shareholder approval documentation
Valuation coordination
Offer / grant documents
Allotment, PAS-3 and MGT-14 filing support
Register of Members and cap table update
FEMA / FDI review for non-resident investors

Cross-Border

Custom quote

Timeline: Quoted on investors, FEMA and filings

Multiple investors and complex investment agreements
Valuation coordination
Offer / grant documents and approvals
Authorised capital increase and SH-7 support
Allotment, PAS-3 and MGT-14 filing support
FEMA / FDI review and reporting support
Ongoing cap-table administration

Government fee — paid by you at actuals

Government/MCA fees, stamp duty, valuation, legal and other third-party costs are separate from the professional fee and are payable where applicable.

Every price above is a professional fee, excluding GST and government charges. 50% on delivery.

Share-issue fees are quoted on scope because the work depends on the issue route, number of investors or shareholders, security type, issue size, valuation, listed/unlisted status, FEMA, existing documentation and the number of filings. Government/MCA fees, stamp duty, valuation, legal and other third-party costs are separate where applicable.

How it works

Step 1

Understand the transaction

Document the purpose, proposed amount, security, number of securities, proposed issue price, existing capital, proposed investor/employee group, resident/non-resident status and existing shareholder rights.

Step 2

Select the legal route

Determine whether the transaction should be a rights issue, private placement, preferential issue, ESOP, bonus issue or another permitted issue mechanism. Do not use a generic “share issue” document where a route-specific statutory process is required.

Step 3

Review MOA and AOA

Check authorised capital, share classes, issue powers, existing restrictions, investor rights, shareholder agreements and existing options or convertibles.

Step 4

Check authorised capital

If the proposed fresh issue exceeds the existing authorised share capital, increase authorised capital through the applicable process before the relevant allotment.

Step 5

Determine valuation and pricing

Pricing may depend on Companies Act requirements, security type, issue route, company status, investor status, FEMA/FDI, tax and SEBI rules for listed companies. Do not assume that the company's latest funding valuation is automatically the legally acceptable issue price.

Step 6

Obtain corporate approvals

Depending on the route, this can involve Board approval, shareholder approval, special resolution, offer documentation, explanatory statement and other statutory approvals, prepared for the exact issue route.

Step 7

Prepare offer / grant documents

Documents can include an offer letter, application form, ESOP grant documents, subscription agreement, investment agreement, rights offer letter or preferential issue documents, depending on the transaction.

Step 8

Receive subscription money

Where the issue involves subscription money, comply with the applicable banking-channel and statutory requirements, and maintain clear evidence linking investor, application, amount received, security issued and allotment.

Step 9

Complete allotment

Allot securities according to the approved terms, verifying number, price, security, allottee, payment, approval and authorised capital.

Step 10

File applicable MCA forms

Depending on the transaction, filings may include PAS-3, MGT-14, SH-7 where authorised capital is increased, and other route-specific forms. The current MCA form and instruction kit should be checked for every transaction.

Step 11

Update statutory and financial records

Update the Register of Members, capitalisation table, share certificates/demat records, statutory registers, accounting records, beneficial ownership records where applicable and investor records.

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Documents required

MOA/AOA
Current cap table
Board resolutions
Shareholder resolution
Explanatory statement
Valuation report where applicable
Offer letter/application
Subscription agreement
Investor KYC
Banking/payment evidence
Allotment statement
PAS-3 information
MGT-14 information where applicable
SH-7 information where applicable
Share certificates/demat records
FEMA documents
SEBI/stock-exchange documents where applicable

Why CorporateWalla®?

Route selection

The correct statutory route — rights issue, preferential issue, private placement, ESOP or bonus issue — is identified before the company accepts subscription money or allots securities.

Corporate approvals

Board and shareholder approvals, special resolutions and explanatory statements are prepared for the exact issue route.

Documentation and allotment

Offer, grant and subscription documents are prepared and allotment is checked against the approved number, price, security, allottee, payment and authorised capital.

MCA filing and records

Applicable MCA filings such as PAS-3, MGT-14 and SH-7 are supported, and the Register of Members, cap table and statutory records are updated.

Frequently asked questions

It is an issue of additional shares by a company after its existing share capital has been issued, subject to the applicable Companies Act route.

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