SECTION 81(1A)                   FURTHER ISSUE OF CAPITAL

 

 

 

1. Subject                                               - Further Issue of Capital

 

2. Passing Authority                              - General Meeting.

 

3. Nature of the Resolution                - (i) Special Resolution, or

                                                                   (ii) Resolution with simple majority and approval

                                                                        of Central Government.

 

4. Specimen Resolution(s)                -

 

                A. ISSUE OF SHARES OF RIGHTS BASIS TO MEMBERS.

 

                     "That 2,00,000 shares of Rs.10 each be issued by the Company for cash at par payable in full on application and pursuant to section 81(1A) of the Companies Act, 1956, and the Board of Directors of the Company be and is hereby authorised to offer the said shares to the persons whose names appear on the Register of Memberjs of the company as the holders of the shares in the Company on the 30th day of  April 1976 in the proportion of one share for each share held by them and on such other terms and conditions as the Board of Directors of the Company may think fit."

 

                B. ISSUE OF SHARES TO PUBLIC

 

                     That subject to the consent of the Controller of Capital Issues the Board of Directors be and is hereby authorised to offer 5,00,000 equity shares of Rs.10/- each in the authorised capital of the company at a premium of Rs.5 per share to the parties and in the manner specified below on the footing that such equity shares shall rank in all respects pari passu with the existing equity shares in the company save and except that they shall not participate in any dividend with may be declared in respect of any period ending on or prior to 31st December, 1975:- 

 

                (i) 50,000 Equity Shares to employees of the Company being Indian nationals resient in India provided that the maximum number of shares which may be so allotted to any one individual employee shall not exceed 200 Ordinary Shares;

 

                (ii) 50,000 Equity Shares each to Umit Trust of India and Life Insurance corporation of India; and

 

                (iii) 3,50,000 Equity Shares tomembers of the public being Indian nationals resident in India provided that, if any of the shares offered for subscription as mentioned in paragraphs (i), and (ii) above remain unsubscribed, such shares will be available for meeting applications from the public in addition to the shares mentioned in paragraph (iii) above.

 

                That, for the purpose of giving effect to this resolution the Boarkd of Directors of the company, or any Committee thereof that the Board may constitute for this purpose, be and is hereby authorised to do all acts, deeds and things and to take all steps and given such directions as may be necessary  and to settle all questions or difficulties that may arise in such manner as the Board or the said Committee in its absolute discretion maydeem fit."

 

5. Guidelines:

 

                i) In the case of shares issued on rights basis, the resolution would normally deal with fractions where applicable.

 

                ii) Where the resolution is not passed as a special resolution but passed with a simple majority, the Board of Directors must obtain approval of the Central Government after satisfying the Government that the proposal is most beneficial to the Company.

 

                iii) Authorised Capital may have to be increased where necessary.

 

                iv) The resolution in general meeting is necessary only where it is proposed to issue further shares.

 

                a) at any time after the expiryof 2 years from the formation of the company; or

 

                b) at any time after the expiry of one year from the allotment of shares in the company made for the first time after its formation whichever is earlier.

 

                v) The power given to the general meeting is wide and unrestricted.  It can not be restricted to a decision as to whether the new shares should be allotted to equity shareholders alone or in between the two classes of shares, equity and preference.

 

                vi) Where the resolution provides for allotment of shares privately at sole direction of directors to small circle of friends etc. it can not be challenged if no shares are issued to existing shareholders or to public.

 

                vii) Approval of Reserve Bank of India is necessaryfor allotment of shares to persons resident outside India.

 

                viii) For a detailed discussion on issue of capital, please refer to "Procedures for Capital Issues and Foreign Collaboration" by the same authors.

 

6. Filing: a) Form 23--within 30 days.

                                b) Form 2--within 30 days of allotment.