62. Further issue of share capital
(1) Where at any time, a company having a share capital proposes to increase its
subscribed capital by the issue of further shares, such shares shall be offered—
(a) to persons who, at the date of the offer, are holders of equity shares of the
company in proportion, as nearly as circumstances admit, to the paid-up share capital
on those shares by sending a letter of offer subject to the following conditions,
namely:—
(i) the offer shall be made by notice specifying the number of shares
offered and limiting a time not being less than fifteen days and not exceeding
thirty days from the date of the offer within which the offer, if not accepted, shall
be deemed to have been declined;
(ii) unless the articles of the company otherwise provide, the offer aforesaid
shall be deemed to include a right exercisable by the person concerned to
renounce the shares offered to him or any of them in favour of any other person;
and the notice referred to in clause (i) shall contain a statement of this right;
(iii) after the expiry of the time specified in the notice aforesaid, or on
receipt of earlier intimation from the person to whom such notice is given that he
declines to accept the shares offered, the Board of Directors may dispose of
them in such manner which is not dis-advantageous to the shareholders and the
company;
(b) to employees under a scheme of employees’ stock option, subject to special
resolution passed by company and subject to such conditions as may be prescribed;
or
(c) to any persons, if it is authorised by a special resolution, whether or not
those persons include the persons referred to in clause (a) or clause (b), either for cash
or for a consideration other than cash, if the price of such shares is determined by the
valuation report of a registered valuer subject to such conditions as may be prescribed.
(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be
despatched through registered post or speed post or through electronic mode to all the
existing shareholders at least three days before the opening of the issue.
(3) Nothing in this section shall apply to the increase of the subscribed capital of a
company caused by the exercise of an option as a term attached to the debentures issued or
loan raised by the company to convert such debentures or loans into shares in the company:
Provided that the terms of issue of such debentures or loan containing such an option
have been approved before the issue of such debentures or the raising of loan by a special
resolution passed by the company in general meeting.
(4) Notwithstanding anything contained in sub-section (3), where any debentures
have been issued, or loan has been obtained from any Government by a company, and if that
Government considers it necessary in the public interest so to do, it may, by order, direct that
such debentures or loans or any part thereof shall be converted into shares in the company
on such terms and conditions as appear to the Government to be reasonable in the
circumstances of the case even if terms of the issue of such debentures or the raising of such
loans do not include a term for providing for an option for such conversion:
Provided that where the terms and conditions of such conversion are not acceptable
to the company, it may, within sixty days from the date of communication of such order,
appeal to the Tribunal which shall after hearing the company and the Government pass such
order as it deems fit.
(5) In determining the terms and conditions of conversion under sub-section (4), the
Government shall have due regard to the financial position of the company, the terms of
issue of debentures or loans, as the case may be, the rate of interest payable on such
debentures or loans and such other matters as it may consider necessary.
(6) Where the Government has, by an order made under sub-section (4), directed that
any debenture or loan or any part thereof shall be converted into shares in a company and
where no appeal has been preferred to the Tribunal under sub-section (4) or where such
appeal has been dismissed, the memorandum of such company shall, where such order has
the effect of increasing the authorised share capital of the company, stand altered and the
authorised share capital of such company shall stand increased by an amount equal to the
amount of the value of shares which such debentures or loans or part thereof has been
converted into.