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ARTICLE · 25 JULY 2016

MCA Notifies Changes To The Share Capital And Debentures Rules

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On 19 July 2016, the Ministry of Corporate Affairs notified the Companies (Share Capital and Debentures) Third Amendment Rules 2016 to amend certain provisions of the Companies (Share Capital and Debentures) Rules 2014.

IndiaCorporate/Commercial Law
Sharad Moudgal
Sharad Moudgal
Sanjay Khan Nagra
Sanjay Khan Nagra
Aishwarya Giridhar
Aishwarya Giridhar
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On 19 July 2016, the Ministry of Corporate Affairs notified the Companies (Share Capital and Debentures) Third Amendment Rules 2016 (Amendment) to amend certain provisions of the Companies (Share Capital and Debentures) Rules 2014 (Rules). The Rules, inter alia, set out the procedure for issuance of shares and debentures, disclosure and filing requirements, and other compliances. The Amendment modifies rules relating to the issue of shares (including by start-ups), pricing, and creation of security for secured debentures. The key changes introduced by the Amendment are summarised below.

KEY ASPECTS OF THE AMENDMENT

Relaxation of preferential allotment process:

  • The Rules previously stipulated that securities allotted on a preferential basis should be fully paid-up at the time of their allotment. The Amendment has removed this stipulation and provides much needed clarity on the issuance of partly-paid shares. Companies could previously issue partly-paid shares

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