SEBI Guidelines regarding Rights issue. Companies can now issue Bights Shares subject to the provisions of Section 81 of the Companies Act and the Guidelines for Disclosure and investor Protection issued by the SEBI. The SEBI Guidelines issued in June, 1992 cover New Issue of shares, as well as issue of Rights Shares The SEBI Guidelines relating to issue of Rights shares have been given later in Chapter 19
Duties of the Secretary rev: issue of RigKts Shares. The duties of the compar y secretary may be summarized as follows:
(i) See that the rights issue is within file limits ofthe autho 7isee capital of the company and of the Articles of the company
(hi) See that the Guidelines issued by the SBBI in this respect are followed and the draft prospectus or letter of offer is vetted by the SEBI before it is issued. However after 1.7.95 right issues which are not accompanied bv public issues 3 months prior or subsequent to the date of rights issue will not be required lo be vetted bv SEEI The lead managers arerequired to file the letter of offer for a rights issue with SEBI 6 weeks prior to the date on which the offer is proposed or commenced. If SEBI does not ask for any clarifications within 21 days from such filing, the Issuer and Lead manager can go ahead with the proposed offer.
(iii) Ensure that the gap between tile closure dates of right issue and public issue does not exceed 30 davs.
(iv) Vhere the issue size -exceeds Rs. 50 lakes, steps tp be taken for the appointment of a merchant banker. As per SEBI Guidelines, appointment of a Mercl lant banker is mandatory m case of rights issue of listed companies exceeding Rs. 50 lalchs.
(v) Ensure that the issue is not kept open beyond 60 days.
(vi) Open a specific bank account for keeping subscription received against rights issue.
(vi;) Convene a Board meeting, in consultation with the directors, to consider the proposal for rights issue and the proportion in winch the same should be issued.
N Fix up the date. tin e and place and agenda of the general meeting if permission of general meeting is required under the Arhcles for increase of capital. If the rights shares are to be issued to the members state. a special resolution has to be passed at the general meeting.
(ix) Prepare the explanatory state, if necessary, and issue notices of the meeting. Detailed i if omlauon as to how the additional capital is proposed to be Dtilised and broad ideas about future earnings, required by the Guidelines, should be included in the explanatory statement or in a separate letter addressed to shareholders.
(,r,) If a special'resclution is paired at the g:ns;ai meeting. file !he tesoloticn No ith tile Registrar
allotrnent.
(xvii) Forward a report in the prescribed form together nvith the compliance certificate to the clays oftlie closure of the issue :
REDEMPTION OF PREFERENCE SHARES .
lNGORPORATlON OF A COMPANY - 181
CALLS ONi SHAtRE
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