Background

Section 39 of the Companies Act, 2013 governs the allotment of securities by a company and prescribes conditions that must be fulfilled before making an allotment to the public. It ensures that securities are allotted only after receipt of the minimum subscription amount and the prescribed application money. To maintain transparency and provide regulatory oversight, companies are required to report every allotment of securities to the Registrar of Companies through a statutory return in Form PAS-3. Rule 12 of the Companies (Prospectus and allotment of securities) Rules, 2014 prescribes the procedure, timelines, and documentation requirements for filing this return.

Applicability:

This compliance applies to every company having share capital that makes any allotment of securities, whether through public issue, rights issue, preferential allotment, private placement, or for consideration other than cash.

Compliance Requirements

• A company having share capital is required to file a Return of Allotment with the Registrar whenever it makes any allotment of securities. This return must be filed in Form PAS-3 within thirty days of the allotment along with the prescribed fee.
• Section 39 provides that no allotment of securities offered to the public shall be made unless the minimum subscription amount stated in the prospectus has been received and the application money has been paid. The application money must be at least five per cent of the nominal value of the security or such other percentage as specified by SEBI. If the minimum subscription amount is not received within thirty days from the date of issue of the prospectus (or such other period as specified by SEBI), the application money must be refunded within the prescribed time and manner.
• Under sub-section (4) of Section 39, every allotment of securities requires filing of a return with the Registrar. Rule 12 further provides that the company must attach a detailed list of allottees to Form PAS-3 specifying their names, addresses, occupations (if any), and the number of securities allotted to each. The list must be certified by the signatory to the form as true and correct as per company records.

Where securities (other than bonus shares) are allotted for consideration other than cash, the company must attach:

• • A duly stamped copy of the contract pursuant to which the allotment has been made;
  • In case the contract is not in writing, complete stamped particulars of the contract; and
  • A report of a registered valuer in respect of valuation of the consideration.

If the allotment is made under Section 62(1)(c) (preferential allotment) by an unlisted company, a valuation report from a registered valuer must be attached to Form PAS-3. Pending notification of qualifications for valuers, valuation may be carried out by an independent SEBI-registered merchant banker or a chartered accountant in practice having at least ten years of experience.

Timeline:

• Filing of Form PAS-3: Within 30 days from the date of allotment of securities.

Attachments Required:

• List of allottees with prescribed details, duly certified;
• Copy of contract for allotment for consideration other than cash, if applicable;
• Stamped particulars where contract is not in writing;
• Valuation report of registered valuer for non-cash consideration;
• Valuation report in case of preferential allotment under Section 62(1)(c), where applicable.

Penalty & Punishment

In case of default in filing the return of allotment or in refund of application money where minimum subscription is not received:

• The company and every officer in default shall be liable to a penalty of ₹1,000 for each day during which the default continues, subject to a maximum of ₹1,00,000 for each default whichever is less