The Ministry of Corporate Affairs (MCA) amended Companies (Share
Capital and Debentures) Rules, 2014 vide notification dated 19th July,
2016 by the Companies (Share Capital and Debentures) Third Amendment Rules, 2016. The summary of same is as under:
1. Now shares with differential rights can
be issued after 5 years once the default is made good.
2. Exemptions to start up :
a. Sweat Equity Shares can be issued upto
50% of paid up capital upto 5 years from the date of
registration/incorporation
b. ESOP can be issued to the promoters and
to director who directly or indirectly, holds more than 10% percent of the
outstanding equity shares of the company
3. Preferential offer of shares can now be
partly paid up shares instead of fully paid shares
4. Preferential offer of convertible
securities – Price to be determined
a. Either at the time of offer of
convertible securities or
b. Not earlier than 30 days from the date
holder becomes entitled to apply for shares on the basis of valuation report
given not earlier than 60 days from the date holder becomes entitled to apply
for shares
However
the decision to be taken at the time of offer itself
5. SH-7 is required to be filed with ROC
for increase in members also
6. In case of secured debentures, charge
can be created on the assets of the company, or its subsidiaries or its holding
company or its associates companies
7. DRR is to be created for outstanding
value of debentures
The said notification can be downloaded from the following link :
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