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Change in Paid-up Capital (Allotment of Shares)

  • Legalizes the infusion of fresh equity into the company, providing the necessary liquidity for operations and expansion.
  • Facilitates the formal onboarding of new investors, venture capitalists, or strategic partners as shareholders.
  • Enables the implementation of Employee Stock Option Plans (ESOPs), allowing the company to attract and retain top talent through equity.
  • Increases the company’s "Net Worth," which improves its credit rating and ability to secure higher loan limits from banks.
  • Provides a mechanism for converting debt into equity, helping to deleverage the balance sheet and improve financial health.
  • Formalizes the rights and voting power of shareholders in proportion to their new capital contribution.
  • Enhances the company's valuation by demonstrating successful funding rounds or the capitalization of reserves.
  • Ensures that the company’s internal share records are synchronized with the official Ministry of Corporate Affairs (MCA) database.

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Trusted Clients

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Overview

A Change in Paid-up Capital, specifically through the allotment of shares, is a critical corporate event governed by Sections 42 and 62 of the Companies Act, 2013. The "trigger" occurs the moment the Board of Directors passes a resolution to allot shares to specific individuals or entities—whether through a Rights Issue, Private Placement, Preferential Allotment, or the exercise of ESOPs.

In the 2026 MCA V3 regulatory ecosystem, this is an evidence-backed filing. The company must ensure that the "Authorized Capital" (the ceiling) has already been increased to accommodate this change. The primary filing for this event is e-Form PAS-3 (Return of Allotment). A major requirement in 2026 is the submission of a Valuation Report from a Registered Valuer to ensure that the shares are being issued at a fair market value.

For the FY 2025–26 cycle, the MCA has strictly linked the allotment to the Audit Trail (Edit Log) compliance. The accounting software must record the exact date the application money was received and the date the Board approved the allotment. Furthermore, the money must be received through proper banking channels into a separate bank account (in cases of Private Placement). The countdown for filing is strictly 30 days from the date of allotment. Failure to file within this window is treated as a serious compliance lapse, potentially leading to the allotment being deemed invalid and triggering heavy penalties.

Document Required

Documents
  • 1 Permanent Account Number (PAN) Card of the Company.
  • 2 Aadhaar Card of the Authorized Director.
  • 3 PAN Card of the Authorized Director.
  • 4 Certified Copy of the Board Resolution for the allotment of shares.
  • 5 Valuation Report from a Registered Valuer (mandatory for most allotments).
  • 6 List of Allottees stating names, addresses, and the number of shares allotted.
  • 7 Copy of the Special Resolution (if filed via MGT-14).
  • 8 PAS-4 (Offer Letter) and the record of private placement (PAS-5).
  • 9 Proof of Banking Channel (Bank statement showing receipt of application money).

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Pre-Event Procedures

Step Name Short Description Authority
Valuation Report Obtaining a report from a Registered Valuer to determine the share price. Registered Valuer
Board Resolution Approving the offer of shares and calling for an EGM (if required). Board of Directors
Shareholder Approval Passing a Special Resolution (for Private Placement/Preferential Allotment). Shareholders
Offer Letter Issuing the offer letter (PAS-4) and receiving application money. Company Secretary

Filing Requirements

Form Name Trigger/Description Countdown Deadline
MGT-14 Filing the Special Resolution for Private Placement/Preferential Allotment. 30 Days from EGM
PAS-3 Return of Allotment containing details of the new shareholders. 30 Days from Allotment
Share Certificates Issuance of physical or demat share certificates to the allottees. 60 Days from Allotment

Penalty and Non-compliance Risk

Penalty and Non-compliance Risk

High Daily Monetary Penalty for late filing of PAS-3
Invalidation of the Share Allotment
Mandatory Refund of the investment amount with 12% interest
Personal Liability of Directors for unauthorized issuance
Deactivation of the Company's ability to file other forms
Rejection of the allotment by the ROC for under-valuation
Prosecution for violating Section 42/62 provisions

FAQs

What is the deadline for filing PAS-3?

It must be filed within 30 days from the date of the Board meeting where shares were allotted.

Is a Valuation Report mandatory?
Can we receive share application money in cash?
What is the "60-day rule" for allotment?
Is MGT-14 always required?
Can we allot shares beyond the Authorized Capital?
What is Form PAS-3?
Do we need to pay stamp duty on allotment?
What is the "Audit Trail" requirement for 2026?
Can shares be allotted for "consideration other than cash"?

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