Share allotment is the formal corporate process of issuing fresh equity or preference shares to approved applicants pursuant to Section 39 and Section 42 of the Companies Act, 2013, establishing legally binding member rights. Executing share allotment requires board resolution approval, valuation compliance, and statutory filing of Form PAS-3 with the Registrar of Companies.
Statutory Pre-requisites for Allotting New Shares
Before passing an allotment resolution, corporate management must verify that specific legal and procedural conditions are fully satisfied under Indian company law.
- Authorised Capital Headroom: Confirming that the proposed allotment total does not exceed the company's unissued authorised share capital ceiling.
- Subscription Monies Escrow: Ensuring all application funds are deposited and held in a separate scheduled bank account until allotment is formally approved.
- Registered Valuer Certificate: Obtaining a valuation report from an IBBI-registered valuer confirming share pricing compliance under statutory rules.
Board Resolution Execution and Filing Form PAS-3
The allotment process follows a strict statutory timeline designed to protect investor funds and ensure public registry transparency.
- Board Allotment Resolution: Convene a board meeting within sixty days of receiving application money to approve share allotment and authorize signature execution.
- Filing Return of Allotment (Form PAS-3): Submit Form PAS-3 on the official Ministry of Corporate Affairs V3 portal within fifteen to thirty days of allotment. Form PAS-3 must include a certified list of allottees detailing names, addresses, occupational details, number of shares allotted, and consideration received.
- Attaching Resolution and Valuation Reports: Enclose board resolutions, special resolutions, valuation reports, and subscription agreements with the portal filing.
Share Certificate Generation and Stamp Duty Settlement
Following allotment approval, the company must generate Form SH-1 share certificates within two months of allotment. Certificates must bear authorized director signatures, company seal if applicable, and required state-specific stamp duty stamps affixed within thirty days of issuance under state stamp acts.
Member Register Maintenance and Demat Mandatory Compliance
Corporate secretaries must immediately enter allottee particulars into Form MGT-1 (Register of Members). Furthermore, unlisted public companies and private entities meeting turnover thresholds must complete dematerialisation of shares through NSDL or CDSL depositories in accordance with corporate rules.
Refund Obligations and Penalties for Allotment Delays
If a company fails to complete share allotment within sixty days of receiving subscription money, it must refund application funds within fifteen days. Failure to repay monies within statutory limits attracts interest liabilities at twelve percent per annum under Section 42(6) of the Act.
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Expert Allotment Filing Services
Navigating share allotment requires strict adherence to statutory timelines, valuation mandates, and portal filing procedures. Expert secretarial guidance guarantees error-free filings, protecting board decisions and maintaining flawless compliance history.
Our dedicated corporate compliance team provides end-to-end management of share allotment proceedings, handling valuation verification, board documentation, MCA Form PAS-3 submissions, and share certificate drafting to support your corporate growth.