Information and Documents We Need
Bookkeeping runs on your source documents. Here’s what we typically need most of it just shared periodically.
The plan
- For: Advising the route
- Notes: Who's getting shares, why, how many
Company details
- For: The process/filings
- Notes: Name, CIN, current capital
Current shareholding
- For: The allotment
- Notes: Existing shareholders and holdings
Allottee details
- For: The new shares
- Notes: Names, holdings, consideration
Price/consideration
- For: The terms
- Notes: Issue price, amount
Authorised capital position
- For: Capital check
- Notes: To see if SH-7 is needed
Financials
- For: Valuation (where needed)
- Notes: For the registered valuer
Board/shareholder details
- For: Resolutions
- Notes: For meetings and approvals
Digital signatures (DSC)
- For: Filing
- Notes: Of the authorised director
Key Compliances and Timelines
Several specific compliances and deadlines apply to a share allotment. Getting them right is what keeps the allotment valid:
| Compliance | What it is | Timeline (generally) |
|---|---|---|
|
Form PAS-3
|
Return of Allotment to the ROC
|
Within the prescribed time (route-dependent)
|
|
Share certificates
|
Issued to allottees (Form SH-1)
|
Within 2 months of allotment
|
|
Separate bank account
|
For private placement money
|
Money kept separately until allotment
|
|
Allotment
|
Passing the allotment resolution
|
Within the prescribed time of receiving money
|
|
Valuation report
|
By a registered valuer
|
Before allotment, where required
|
|
Register of members
|
Updated for the new shares
|
Promptly after allotment
|
|
Stamp duty
|
On the share certificates
|
As applicable (state rules)
|
Our Share Allotment Process
Step 1 – Understand the plan
We learn who's getting shares, why and on what terms.
Step 2 – Advise the route
We confirm the correct allotment route.
Step 3 – Check authorised capital
We increase it (SH-7) first if it's insufficient.
Step 4 – Coordinate valuation
We arrange a registered valuer's report where required.
Step 5 – Prepare resolutions & offer
We draft the resolutions and offer documents.
Step 6 – Support approvals
We help pass the board/shareholder resolutions.
Step 7 – Handle the consideration
We ensure the money is received and recorded correctly.
Step 8 – Allot the shares
We pass the allotment resolution within the timeline.
Step 9 – Issue share certificates
We help issue certificates and update the register.
Step 10 – File PAS-3
We file the return of allotment on time.
Step 11 – Finalise records
We ensure the records reflect the new capital.
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Share Allotments in Vasai Virar - Issue Shares Correctly & File PAS-3
Need to issue new shares in your company to raise capital, bring in an investor or add a co-founder? Allotting shares isn’t just a matter of updating a spreadsheet: it’s a proper corporate process under the Companies Act, with resolutions, valuation where required, share certificates and a return of allotment (Form PAS-3) to be filed with the ROC on time. Get the process or the timelines wrong and the allotment can be defective or attract penalties. Digital Vasai Tax handles share allotments in Vasai Virar end to end, with valuation and any certification arranged through associated professionals.
A share allotment is the process by which a company issues new shares to shareholders – existing ones, new investors, founders or employees thereby increasing its issued and paid-up share capital. Companies allot shares for many reasons: to raise fresh capital for the business, to bring in an investor in exchange for their investment, to add a co-founder or key person as a shareholder, to allot shares to employees under an ESOP, to issue bonus shares or to convert loans into equity. Whatever the reason, allotting shares is a formal corporate action governed by the Companies Act, 2013, involving a defined process, the right resolutions, an offer through the correct route, receipt of the consideration, a valuation where required, issue of share certificates, updating the register of members and filing the return of allotment (Form PAS-3) with the Registrar of Companies within the prescribed time.
Getting a share allotment right matters, because it changes the ownership of the company and is a compliance-heavy exercise with strict rules and timelines. There are different routes for allotting shares – a rights issue, a private placement, a preferential allotment and others. Each with its own requirements and using the wrong route or missing a step can make the allotment defective, create disputes over ownership or attract penalties. The consideration for the shares generally must actually be received (and for a private placement, held in a separate bank account), a valuation by a registered valuer is required in certain cases, share certificates must be issued within the prescribed time and Form PAS-3 must be filed with the ROC within its deadline. Our role at Digital Vasai Tax is to handle the whole process correctly: we advise on the right route, prepare the resolutions and documents, coordinate valuation where required, help with the share certificates and register and file PAS-3 on time with valuation, any professional certification and digital signatures arranged through associated professionals. Two honest points run throughout: an allotment must follow the proper process and reflect a genuine issue of shares for consideration actually received it can’t be shortcut or backdated and timelines and valuations aren’t optional, they’re what make the allotment valid and compliant. This page explains share allotments in full – the routes, the process, the filings, common mistakes and the questions Vasai-Virar companies ask us. Read on or jump to the section you need.
The Main Routes for Allotting Shares
Different situations call for different allotment routes, each with its own requirements under the Companies Act, 2013:
- Rights issue: shares offered to existing shareholders in proportion to their holding; a common way to raise further capital from current owners.
- Private placement: shares offered to a select group of identified persons through an offer letter (Form PAS-4), with the consideration held in a separate bank account and specific procedures and limits (under Section 42).
- Preferential allotment: shares allotted to specific persons (often a new investor) on a preferential basis, requiring a special resolution and a registered valuer's valuation.
- ESOP allotment: shares allotted to employees on exercise of options under an approved employee stock option plan.
- Bonus issue: fully paid bonus shares issued to existing shareholders out of free reserves or securities premium, with no fresh consideration.
- Conversion: converting loans, debentures or other instruments into equity shares, where the terms provide.
What the Allotment Process Involves
While the details vary by route, a share allotment generally involves these elements:
- Check authorised capital: ensure the company has enough authorised share capital for the new shares; if not, increase it first (which needs a shareholder resolution and a filing, Form SH-7).
- Pass the resolutions: a board resolution and often a shareholder resolution (a special resolution for routes like preferential allotment or private placement).
- Make the offer: through the correct route (e.g. an offer letter for a private placement or a letter of offer for a rights issue).
- Obtain a valuation: a registered valuer's valuation report where required (e.g. preferential allotment / private placement).
- Receive the consideration: the money for the shares must actually be received (and for a private placement, kept in a separate bank account).
- Allot the shares: pass the board resolution allotting the shares within the prescribed time.
- Issue share certificates: issue share certificates (Form SH-1) to the allottees within the prescribed time (generally two months of allotment).
- Update the register: update the register of members to reflect the new shares and shareholders.
- File PAS-3: file the return of allotment (Form PAS-3) with the ROC within the prescribed time.
How We Handle Your Allotment
It’s helpful to be clear about how the work is done and where professionals come in:
- We advise the route: we determine the correct allotment route for your situation and its requirements.
- We check the capital: we confirm authorised capital is sufficient and increase it (SH-7) first if needed.
- We prepare the documents: resolutions, offer letters and the rest of the paperwork for the route.
- We coordinate valuation: through an associated registered valuer where the route requires it.
- We manage the steps: consideration, allotment resolution, share certificates and register update.
- We file PAS-3: the return of allotment, with digital signatures and any certification via associated professionals, within the timeline.
Two Things to Get Right - Authorised Capital and Valuation
Two points frequently need attention before an allotment can proceed:
- Enough authorised capital: a company can only allot shares up to its authorised share capital. If the intended allotment would exceed it, the authorised capital must be increased first, which requires a shareholder resolution, an alteration of the capital clause, and a filing (Form SH-7), together with the applicable fees and stamp duty. We check this at the outset and handle the increase if needed.
- Proper valuation: for certain routes (such as a preferential allotment or private placement), the shares must be issued at a price supported by a valuation from a registered valuer. The valuation ensures the shares are issued at a fair value, which matters for compliance and for tax. We coordinate the valuation through an associated registered valuer where it's required.
Benefits of Handling Your Allotment Through Us
Done properly, your allotment is valid, compliant and cleanly recorded. Here’s what we provide.
| Benefit | Description |
|---|---|
|
Right route chosen |
The correct allotment route for your situation. |
|
Resolutions prepared |
Board and shareholder resolutions drafted. |
|
Valuation coordinated |
Via an associated registered valuer where needed. |
|
Consideration handled |
Money received and recorded correctly. |
|
Certificates issued |
Share certificates within the timeline. |
|
PAS-3 filed on time |
The return of allotment filed correctly. |
|
Capital checked |
Authorised capital increased first if needed. |
|
Register updated |
The register of members kept accurate. |
|
Ownership clear |
The new shareholding cleanly recorded. |
|
Timelines met |
Each deadline observed. |
|
Compliance assured |
The allotment valid under the Act. |
|
Startup-round ready |
Investor allotments done properly. |
|
Disputes avoided |
Clean records reduce ownership disputes. |
|
Certification arranged |
Via associated professionals where needed. |
|
DSC handled |
Digital signatures arranged for filings. |
|
Stamp duty addressed |
On share certificates, as applicable. |
|
Consistent records |
Aligned with your other filings. |
|
Regularisation help |
Past allotment issues addressed. |
|
Honest guidance |
Clear on what your allotment requires. |
|
Transparent fees |
Cost agreed upfront. |
|
Local & accessible |
A Vasai-Virar team to work with. |
|
One-stop handling |
Allotment alongside ROC, tax and accounts. |
What Is a Share Allotment?
A share allotment is the process by which a company issues and allots new shares, increasing its issued and paid-up share capital and giving the allottees ownership (equity) in the company. When a company allots shares, it creates new shares and assigns them to the persons taking them up whether existing shareholders, new investors, founders or employees, in exchange for consideration (usually money, but sometimes other consideration). This is how companies raise equity capital and how ownership is formally extended to new or existing members. Because it changes the company’s capital and its ownership structure, a share allotment is a significant corporate action, carried out through a defined legal process under the Companies Act, 2013 not something that can be done informally.
Companies allot shares for a range of purposes. The most common is to raise fresh capital bringing money into the business in exchange for equity, whether from the existing owners putting in more or from a new investor. Others include adding a co-founder or key person as a shareholder, allotting shares to employees under an Employee Stock Option Plan (ESOP), issuing bonus shares to existing shareholders out of the company’s reserves or converting loans or other instruments into equity. Each purpose typically maps to a particular route of allotment (a rights issue, a private placement, a preferential allotment, a bonus issue, and so on) and each route has its own requirements under the Act. Whatever the purpose and route, the allotment must be done correctly with the right approvals, the consideration properly received, valuation where required, share certificates issued, the register of members updated and the return of allotment filed with the ROC on time. We manage this whole process, so your allotment is valid and compliant.
Common reasons and routes for allotting shares
| Reason | Typical route |
|---|---|
|
Raising capital from existing owners
|
Rights issue
|
|
Bringing in a new investor
|
Private placement / preferential allotment
|
|
Adding a co-founder/key person
|
Preferential allotment / private placement
|
|
Rewarding employees
|
ESOP allotment
|
|
Rewarding existing shareholders
|
Bonus issue (from reserves)
|
|
Converting a loan to equity
|
Conversion / preferential allotment
|
|
A specific investor at a set price
|
Preferential allotment
|
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Who Needs Share Allotment Services?
Companies issuing shares need this handled properly. It’s especially relevant if:
Raising Capital
Bringing money into the company for equity.
Bringing in Investors
Allotting shares to new investors against their investment.
Adding Co-Founders
Issuing shares to new partners or co-founders joining the business.
ESOP & Bonus Shares
Allotment to employees or existing shareholders.
Loan to Equity Conversion
Issuing shares against outstanding loans.
Startup & Past Allotments
Investor rounds and regularisation of earlier allotments.
25 Share Allotment Mistakes to Avoid
These errors cause invalid allotments, penalties and disputes. We help you avoid every one.
| Mistakes | Description |
|---|---|
|
Treating it as informal |
Not following the proper legal process. |
|
Wrong allotment route |
Using the wrong route for the situation. |
|
Insufficient authorised capital |
Allotting beyond the authorised limit. |
|
Skipping the valuation |
No registered valuer report where required. |
|
Arbitrary pricing |
Setting a price a valuation doesn’t support. |
|
Not receiving consideration |
Allotting before the money is received. |
|
No separate bank account |
For private placement money. |
|
Missing the PAS-3 deadline |
Late return of allotment, with penalties. |
|
Not issuing share certificates |
Or issuing them late. |
|
Not updating the register |
The register of members left inaccurate. |
|
Skipping shareholder approval |
Where a special resolution was needed. |
|
Wrong or missing resolutions |
Approvals not properly passed. |
|
Backdating the allotment |
Recording a date it didn’t happen. |
|
Exceeding private placement limits |
Breaching the Section 42 conditions. |
|
Ignoring stamp duty |
On the share certificates. |
|
Miscalculating the shareholding |
Errors in the new capital structure. |
|
Not planning the timeline |
Rushing and missing steps. |
|
Poor documentation |
No proper record of the allotment. |
|
Ignoring existing shareholders’ rights |
In a rights issue context. |
|
Mixing up the routes’ requirements |
Applying the wrong rules. |
|
No DSC ready |
Filings can’t be submitted. |
|
Inconsistent with other filings |
Capital not matching the records. |
|
Leaving past errors unaddressed |
Defective prior allotments unresolved. |
|
DIY without the rules |
Getting a compliance-heavy process wrong. |
|
No professional support |
Handling a complex allotment alone. |
Why Choose Digital Vasai Tax for Share Allotments
We’re a local Vasai-Virar practice handling company compliance, accounting and tax, working with associated professionals (registered valuers, Company Secretaries and Chartered Accountants) for valuation, certification and ROC filing, so we can carry out your allotment correctly and completely. For share allotments specifically, here’s what sets us apart.
Resolutions & documents
Valuation coordinated
Capital checked
Certificates & register
PAS-3 on time
Timelines managed
Clean records
Honest guidance
Local & one-stop
Resolutions
& documents
Valuation
coordinated
Capital
checked
Certificates
& register
PAS-3
on time
Timelines
managed
Honest
guidance
Local &
one-stop
Why Customer Trust Us
Companies trust us because we carry out their share allotments correctly and completely advising the right route, checking the authorised capital, preparing the resolutions and documents, coordinating valuation through an associated registered valuer where required, managing the consideration, certificates and register and filing PAS-3 on time, so the allotment is valid, the ownership cleanly recorded, and the deadlines met. We’re honest about governance: an allotment must be a genuine issue for consideration actually received, done by the proper process, and we won’t shortcut or backdate. Because we also handle accounts, tax and other ROC compliance, everything is consistent and done in one place. Getting companies’ share issues done properly, so they stand up to scrutiny, is what earns lasting trust.
Who We Help
We handle share allotments for all kinds of companies.
| Applicant | Typical allotment |
|---|---|
|
Startups raising a round
|
Investor allotments (private placement)
|
|
Companies raising capital
|
Rights issue or preferential allotment
|
|
Companies adding co-founders
|
Preferential allotment
|
|
Companies with ESOPs
|
Allotment on option exercise
|
|
Companies rewarding shareholders
|
Bonus issue from reserves
|
|
Companies converting loans
|
Conversion to equity
|
|
Private limited companies
|
Various allotment routes
|
|
Growing businesses
|
Capital-raising allotments
|
|
Companies regularising records
|
Fixing past allotment issues
|
|
Companies switching advisors
|
Getting the cap table in order
|
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How We've Helped - Representative Examples
1. A Vasai startup raising an investment round
Problem:
A startup was bringing in an investor and needed to allot shares correctly for the round.
Solution:
We handled the private placement route- resolutions, valuation via an associated valuer, consideration, certificates and PAS-3.
Outcome:
The investor was allotted shares cleanly and compliantly, with the cap table correct.
2. A Nalasopara company adding a co-founder
Problem:
A company wanted to give a new co-founder a shareholding but wasn’t sure of the process.
Solution:
We advised a preferential allotment, coordinated the valuation, prepared the resolutions and filed PAS-3.
Outcome:
The co-founder’s shareholding was properly and validly created.
3. A Virar company with capital too low
Problem:
A company wanted to allot shares beyond its authorised capital without realising the limit.
Solution:
We increased the authorised capital (SH-7) first, then carried out the allotment correctly.
Outcome:
The allotment went through validly, with the capital properly increased first.
Share Allotment Myths and the Truth
Myth 1
"Allotting shares is just updating records."
Truth
It's a formal legal process under the Act.
Myth 2
"Any route can be used for any allotment."
Truth
The right route depends on the situation.
Myth 3
"I can set any price for the shares."
Truth
A valuation is required for certain routes.
Myth 4
"No filing is needed for an allotment."
Truth
PAS-3 must be filed with the ROC.
Myth 5
"Share certificates are optional."
Truth
They must be issued within the timeline.
Myth 6
"I can allot before receiving the money."
Truth
Consideration must be received first.
Myth 7
"Authorised capital doesn't limit allotment."
Truth
You can only allot up to authorised capital.
Myth 8
" A board resolution alone always suffices."
Truth
Some routes need shareholder approval too.
Myth 9
"Timelines are flexible."
Truth
PAS-3 and certificate deadlines are binding.
Myth 10
"Stamp duty doesn't apply."
Truth
Stamp duty applies to share certificates.
Conclusion
Share allotment is a crucial corporate process that directly impacts a company’s ownership structure, regulatory compliance and future growth. Whether you are issuing shares to investors, onboarding new shareholders, rewarding employees through equity or raising capital for expansion, every allotment must be carried out in accordance with the provisions of the Companies Act and applicable MCA regulations.
Our Share Allotment services ensure that the entire process is handled accurately and efficiently from preparing board and shareholder resolutions to coordinating valuations where required, issuing share certificates, filing the necessary MCA forms and updating statutory registers. We focus on timely compliance, proper documentation and complete transparency, helping you avoid delays, penalties and procedural errors.
With our professional guidance and end-to-end support, you can complete your share allotment with confidence while ensuring your company remains fully compliant with legal requirements. Let us simplify the process so you can focus on growing your business and achieving your long-term objectives.
Need Expert
Guidance
FAQs
What is a share allotment?
A share allotment is the process by which a company issues and allots new shares, increasing its issued and paid-up share capital and giving the allottees ownership (equity) in the company. When a company allots shares, it creates new shares and assigns them to the persons taking them up, existing shareholders, new investors, founders or employees in exchange for consideration (usually money). It’s how companies raise equity capital and formally extend ownership. Because it changes the company’s capital and ownership, it’s a formal corporate action under the Companies Act, 2013 involving the right resolutions, an offer through the correct route, receipt of consideration, a valuation where required, issue of share certificates, updating the register of members and filing Form PAS-3 with the ROC. We handle the whole process across Vasai-Virar.
What does your share allotment service include?
We handle the whole process end to end: we understand your plan (who’s getting shares, why, on what terms), advise the correct route, check your authorised capital (and increase it via SH-7 first if needed), coordinate a registered valuer’s valuation where required, prepare the resolutions and offer documents, support passing the board/shareholder approvals, handle the consideration correctly, pass the allotment resolution within the timeline, help issue the share certificates and update the register of members, file PAS-3 on time and finalise the records so they reflect the new capital. Valuation, certification and DSCs are arranged through associated professionals.
Why does getting a share allotment right matter?
Because it changes the ownership of the company and is a compliance-heavy exercise with strict rules and timelines. Allotting shares isn’t just updating a spreadsheet, it’s a proper corporate process under the Companies Act, with resolutions, valuation where required, share certificates and a return of allotment (PAS-3) filed with the ROC on time. Get the process or the timelines wrong and the allotment can be defective, create disputes over ownership or attract penalties. And a defective allotment surfaces at the worst moment during due diligence for an investment or sale. Getting it right protects the company and its shareholders, which is exactly what we ensure.
Why use a professional for a share allotment?
Because it’s a formal, multi-step corporate action where a wrong route, a missed resolution, an overlooked valuation or a late PAS-3 can invalidate the allotment or attract penalties, and the consequences show up later, when the cap table is scrutinised by investors or buyers. There are different routes, each with its own requirements and getting the approvals, valuation, consideration, certificates and filing right (and in the right order) is what makes the allotment valid. We advise the route, prepare the documents, coordinate valuation and file PAS-3 on time, so your share issue stands up to scrutiny rather than becoming a problem in a future deal.
What makes Digital Vasai Tax right for share allotments?
We carry out your allotment correctly and completely advising the right route, checking the authorised capital, preparing the resolutions and documents, coordinating valuation through an associated registered valuer where required, managing the consideration, certificates and register and filing PAS-3 on time, so the allotment is valid, the ownership cleanly recorded and the deadlines met. We’re honest about governance: an allotment must be a genuine issue for consideration actually received, done by the proper process and we won’t shortcut or backdate. Because we also handle accounts, tax and other ROC compliance, everything is consistent and in one place. We work with associated registered valuers, CSs and CAs for valuation, certification and filing.
What does "allotting shares" actually do to my company?
It creates new shares and assigns them to the persons taking them up, thereby increasing the company’s issued and paid-up share capital and giving those allottees ownership (equity) in the company. So an allotment changes two things: the company’s “capital” (it goes up by the value of the new shares) and its “ownership structure” (new or existing members hold more of the company). Because it alters both capital and ownership, it’s a significant corporate action carried out through a defined legal process, not something done informally. We manage that process so the change is valid and cleanly recorded.
Why do companies allot shares?
For a range of purposes. The most common is to “raise fresh capital”, bringing money into the business in exchange for equity, whether from existing owners putting in more or from a new investor. Others include “adding a co-founder or key person” as a shareholder, allotting shares to “employees under an ESOP”, issuing “bonus shares” to existing shareholders out of reserves and converting loans or other instruments into equity. Each purpose typically maps to a particular route of allotment, each with its own requirements under the Act. Whatever the reason, we handle the allotment correctly for it.
Is allotting shares just updating the share register?
No, it’s a myth that allotting shares is “just updating records.” It’s a formal legal process under the Companies Act, 2013, involving the right resolutions, an offer through the correct route, receipt of consideration, valuation where required, issue of share certificates, updating the register of members and filing PAS-3 with the ROC. Treating it as informal (a listed mistake) is exactly how allotments end up defective. Updating the register is one step of many and it only reflects a valid allotment if all the other steps were done properly. We do the whole process, so the register update sits on a sound allotment.
What's the difference between issued, paid-up and authorised capital?
“Authorised capital” is the maximum share capital the company is permitted to issue (set in its memorandum), a ceiling. “Issued capital” is the shares actually issued to shareholders. “Paid-up capital” is the amount actually paid on those issued shares. An allotment increases the issued and paid-up capital but only up to the authorised ceiling. So if an allotment would take issued capital beyond the authorised limit, the authorised capital must be increased first (via SH-7). We check this at the outset, so the allotment fits within (or the ceiling is raised to accommodate) your authorised capital.
Does a share allotment change who controls the company?
It can, because it changes the ownership (shareholding) structure. Allotting new shares to a new investor or co-founder gives them a stake and depending on how many shares are issued relative to the existing holdings, it dilutes the existing shareholders proportionately. So an allotment is how ownership is formally extended and getting the numbers and the cap table right matters, because it determines everyone’s proportionate stake going forward. Miscalculating the resulting shareholding is a listed mistake. We compute the new capital structure accurately, so the ownership outcome is exactly what was intended.
What are the different ways to allot shares?
There are several routes, each with its own requirements under the Companies Act, 2013 and the right one depends on who’s getting the shares and why: a “rights issue” (to existing shareholders in proportion to their holding); a “private placement” (to a select group of identified persons via an offer letter, under Section 42); a “preferential allotment” (to specific persons on a preferential basis, needing a special resolution and valuation); an “ESOP allotment” (to employees on exercising options); a “bonus issue” (fully paid shares to existing shareholders from reserves, no fresh money) and “conversion” (turning loans or instruments into equity). Choosing the correct route is the crucial first step. We advise the right one and handle its specific process.
What is a rights issue?
A rights issue offers shares to existing shareholders in proportion to their current holding, a common way to raise further capital from the current owners without bringing in outsiders. Because it’s offered pro-rata to existing members, it preserves their relative ownership (those who take up their rights maintain their proportion). It has its own approval and offer requirements (a letter of offer) and ignoring existing shareholders’ rights in this context is a listed mistake. We handle the rights-issue process” the offer, approvals, allotment and filing, so capital is raised from your existing owners correctly.
What is a private placement?
A private placement offers shares to a select group of identified persons through an offer letter (Form PAS-4), under “Section 42” of the Companies Act, with the consideration held in a “separate bank account” and specific procedures and limits to observe. It’s often used to bring in investors. Because Section 42 has particular conditions (identified offerees, offer-letter requirements, the separate account, allotment within a prescribed period, limits on the number of offerees), it must be followed carefully, exceeding the private-placement limits is a listed mistake. We handle the private-placement route properly, so an investor allotment is valid and Section 42-compliant.
What is a preferential allotment?
A preferential allotment allots shares to specific persons (often a new investor) on a preferential basis and it requires a “special resolution” of the shareholders and a “registered valuer’s valuation” to support the issue price. It’s a common route for bringing in an investor or adding a co-founder at a set price. Because it needs both shareholder approval by special resolution and a proper valuation, skipping either (or setting an arbitrary price) makes it defective. We handle the preferential-allotment route: the special resolution, the valuation via an associated registered valuer and the filing, so it’s done correctly.
What is an ESOP allotment?
An ESOP allotment issues shares to employees on the “exercise of options” under an approved Employee Stock Option Plan, the point at which an employee’s vested options convert into actual shares. It’s how a company delivers equity to staff who were granted options, formalising their shareholding. It has its own process tied to the ESOP scheme’s terms. We handle the allotment on option exercise: the resolutions, the share issue, certificates, register update and PAS-3, so the employees’ shares are validly created under the plan.
What is a bonus issue?
A bonus issue gives “fully paid bonus shares to existing shareholders out of the company’s free reserves or securities premium”, with no fresh consideration (the shareholders don’t pay for them; they’re capitalised from reserves). It rewards existing shareholders by increasing their shareholding without them putting in more money. Because it’s funded from reserves rather than new money, its requirements differ from a cash allotment (no consideration to receive, but conditions on the reserves used). We handle the bonus-issue process: the resolutions, the capitalisation from reserves and the filing, so the bonus shares are validly issued.
What is a conversion (loan to equity)?
Conversion turns “loans, debentures or other instruments into equity shares”, where the terms provide for it, so a lender or investor who advanced money as a loan (or held convertible instruments) receives shares instead, on the agreed conversion terms. It’s a common way to convert a loan on the books into a shareholding, often as part of an investment structure. It typically follows a preferential-allotment-style process. We handle the conversion, checking the terms, passing the resolutions, coordinating valuation where needed and filing PAS-3, so the loan becomes a validly-issued shareholding.
Which route is right for my situation?
It depends on who’s getting the shares and why: raising capital from existing owners → “rights issue”; bringing in a new investor → “private placement / preferential allotment”; adding a co-founder or key person → “preferential allotment / private placement”; rewarding employees → “ESOP allotment”; rewarding existing shareholders → “bonus issue”; converting a loan → “conversion / preferential allotment”; a specific investor at a set price → “preferential allotment”. Choosing the correct route is the crucial first step, because it determines the approvals, documents, valuation and timelines. Using the wrong route (a listed mistake) can invalidate the allotment. We advise the right route for your specific situation.
What happens if I use the wrong route?
Using the wrong allotment route or mixing up the routes’ requirements, is a listed mistake that can make the allotment defective, create ownership disputes or attract penalties. Because each route has its own approvals, documents, valuation needs, limits and timelines, applying (say) the rights-issue process to what should have been a Section 42 private placement means the actual requirements weren’t met, so the allotment doesn’t hold up. This is precisely why the route decision is the crucial first step. We determine the correct route at the outset and apply its specific rules, so the allotment is valid rather than defective on a wrong-route technicality.
What is authorised capital and does it limit how many shares I can allot?
Yes, authorised share capital (nominal capital) is the maximum share capital the company is authorised to issue, set in its memorandum and a company can only allot shares up to it. So if a planned allotment would take issued capital beyond the current authorised capital, you must “increase the authorised capital first”. That increase is itself a process, a shareholders’ resolution, an alteration of the memorandum’s capital clause and a filing (Form SH-7), with the applicable fees and stamp duty. Allotting beyond the authorised limit is a listed mistake. We check your authorised capital at the very start and handle the SH-7 increase first if needed.
What is Form SH-7?
Form SH-7 is the filing made with the ROC to record an “increase in authorised share capital” (among other capital alterations). When a planned allotment would exceed the company’s current authorised capital, we increase it first, passing the shareholders’ resolution, altering the capital clause of the memorandum and filing SH-7 with the applicable fees and stamp duty before proceeding with the allotment. This is a common thing companies overlook (they plan an allotment, then discover their authorised capital is too low, causing delay). We check it upfront so SH-7 is handled as a planned step, not a mid-process surprise.
What if my authorised capital is too low for the allotment?
Then we increase it first, it’s a common situation and one of our case studies is a Virar company that wanted to allot shares beyond its authorised capital without realising the limit; we increased the authorised capital (SH-7) first, then carried out the allotment correctly. Rather than let it derail the allotment mid-process, we check your authorised capital at the outset; if it’s insufficient for your planned issue, we handle the increase (the resolution, memorandum alteration and SH-7 filing) first, then proceed. So a low authorised capital isn’t an obstacle, just a step we handle upfront, so the allotment completes validly.
Do I need a valuation to allot shares?
It depends on the route. For certain routes, particularly a “preferential allotment or a private placement”, the shares must be issued at a price supported by a “valuation from a registered valuer”, to ensure they’re issued at fair value. This matters both for company-law compliance and for tax (issuing shares at an unsupported price can have tax implications). For some other situations, a rights issue to existing shareholders or a bonus issue, a formal registered-valuer valuation may not be required in the same way, though the pricing still needs handling correctly. We assess whether your allotment needs a valuation and coordinate it through an associated registered valuer where required.
Can I set any price I like for the new shares?
No, it’s a myth that you can set any price. For routes requiring a valuation (preferential allotment, private placement), the issue price must be “supported by a registered valuer’s valuation”, you can’t set an arbitrary price. Arbitrary pricing (setting a price a valuation doesn’t support) is a listed mistake and it matters for both compliance and tax because issuing shares at an unsupported price can have tax implications for the company and the allottees. We ensure the issue price is properly supported by the valuation where one is required, so the pricing stands up to both company-law and tax scrutiny.
Why does the valuation matter for tax as well as compliance?
Because issuing shares at a price not supported by a proper valuation can have tax implications, broadly, shares issued at more or less than fair value can trigger tax consequences for the company or the allottees. So the registered valuer’s valuation isn’t just a company-law box to tick; it’s what protects the allotment on the tax side too, by establishing that the shares were issued at a defensible fair value. Because we handle tax as well as the allotment, we make sure the pricing is valuation-supported and the tax position is sound, not just the company-law process.
Who does the valuation?
A “registered valuer”, a professional authorised to provide valuation reports for this purpose. We coordinate the valuation through an associated registered valuer where the route requires it, so the issue price is properly supported. Getting a required valuation is a step people commonly discover midway through an allotment they’d started without it, which delays everything. We assess the valuation requirement at the outset and build it into the process, so it’s obtained before allotment (as required) and the allotment proceeds smoothly rather than stalling.
What is Form PAS-3?
Form PAS-3 is the “Return of Allotment”, the filing a company must make with the ROC after allotting shares, to formally report the allotment. It contains details of the shares allotted, the allottees, the consideration and the resulting capital and it’s how the allotment is officially recorded with the MCA. It must be filed within the prescribed time after allotment (which can be shorter for a private placement than for some other routes) and typically needs certification and a digital signature. It’s a myth that no filing is needed for an allotment, PAS-3 must be filed. We prepare and file it on time, so the allotment is properly recorded.
What happens if PAS-3 is filed late or not at all?
Missing the PAS-3 deadline (a listed mistake) can attract penalties and failing to file it properly leaves the allotment “incompletely recorded”, so even if the shares were issued, the official record with the MCA is defective. That gap surfaces later, during due diligence, when the allotment history is scrutinised. So PAS-3 isn’t optional paperwork, it’s what completes the allotment on the public record. We file it correctly and within its deadline (mapping the route-specific timeline), so the allotment is fully and officially recorded, not just partly done.
What are share certificates (Form SH-1)?
Share certificates (issued in Form SH-1) are the documents issued to the allottees evidencing their ownership of the allotted shares. They must be issued within the prescribed time, generally two months of allotment”. It’s a myth that share certificates are optional; not issuing them (or issuing them late) is a listed mistake. Issuing the certificates within the timeline is part of what completes a valid allotment. We help issue the share certificates to the allottees within the prescribed period, alongside updating the register and filing PAS-3, so every step is done.
Do I need to update the register of members?
Yes, the register of members must be updated “promptly after allotment” to reflect the new shares and shareholders. It’s the company’s own statutory record of who owns what and leaving it inaccurate (a listed mistake) means the company’s ownership record doesn’t match reality, a problem in any future scrutiny. Updating it is part of completing the allotment properly. We update the register of members to reflect the new capital and shareholding, so your statutory records are accurate and consistent with the PAS-3 filing and the certificates.
Does stamp duty apply to share certificates?
Yes, it’s a myth that stamp duty doesn’t apply. Stamp duty applies to the share certificates, as applicable under the relevant state rules. Ignoring stamp duty on the certificates is a listed mistake. It’s an easily-overlooked step in completing an allotment, but it matters for the certificates to be properly stamped and valid. We address the stamp duty on the share certificates as part of handling the allotment, so this requirement isn’t missed.
What resolutions are needed to allot shares?
It depends on the route, but typically an allotment needs at least a “board resolution” and often a “shareholder resolution” as well. A board resolution generally approves and makes the allotment; beyond that, certain routes require shareholder approval by “special resolution”, a preferential allotment and a private placement, for example and increasing authorised capital first (if needed) requires a shareholders’ resolution too. A rights issue has its own approval requirements. It’s a myth that a board resolution alone always suffices. Skipping a required shareholder approval (a listed mistake) makes the allotment defective. We determine and pass the right resolutions for your route.
When is a shareholder special resolution required?
For certain routes, notably a “preferential allotment” and a “private placement” a special resolution of the shareholders (passed by a higher majority at a general meeting) is required, on top of the board resolution. Increasing authorised capital first (where needed) also requires a shareholders’ resolution. Other routes (like some board-level allotments) may proceed largely on board approval. So the resolutions needed vary with the route, and getting the right ones, in the right form and order, is essential for a valid allotment. We determine exactly which resolutions your route requires, draft them and help you pass them properly with the necessary meetings and notices. (This ties into our board resolution and secretarial support service.)
Can I allot shares before receiving the money?
No, an allotment must reflect a “genuine issue of shares for consideration actually received”, so in general the money for the shares needs to be received before (or as part of) the allotment, not after. It’s a myth that you can allot before receiving the money. For a private placement in particular, the rules are specific: the consideration must be received and held in a “separate bank account” and the shares allotted within the prescribed period, the company can’t use the money until the allotment is made. Allotting shares before the money is received is a listed mistake. We ensure the consideration is received and recorded correctly, so the allotment reflects the true position.
Why must private placement money go into a separate bank account?
Because Section 42 requires it: for a private placement, the consideration must be “kept in a separate bank account” until the shares are allotted and the company “can’t use that money” until the allotment is made. This ring-fences the investors’ money and ensures it’s only applied once the shares are properly allotted within the prescribed period. Not using a separate bank account for private-placement money is a listed mistake that breaches Section 42. We manage the consideration correctly, including the separate account for a private placement, so the Section 42 conditions are met and the allotment is valid.
Can an allotment be backdated to a date it should have happened?
No, we won’t backdate. An allotment is a genuine corporate action that can’t be shortcut, backdated or shown as completed when the substance (the consideration) isn’t there. Backdating the allotment (recording a date it didn’t happen) is a listed mistake and misrepresenting the position creates real risks, it can invalidate the allotment, cause disputes and create serious problems later, for instance during due diligence for an investment or sale when the records are scrutinised. We’re honest about governance: the allotment must reflect what actually happened, done by the proper process. That integrity is exactly what protects the company later.
What does "a genuine issue for consideration actually received" mean in practice?
It means the allotment must reflect real substance: actual shares issued to real allottees, for consideration (money, usually) that has genuinely been received through proper channels, not a paper exercise, not a shortcut, not a date recorded that didn’t happen. Two honest points run through everything we do: an allotment can’t be shortcut or backdated and timelines and valuations aren’t optional, they’re what make the allotment valid and compliant. We run the process properly (receive the consideration, then allot and document correctly), so the allotment is genuine and stands up to the scrutiny it will eventually face.
Why does allotment integrity matter for a future investment or sale?
Because when you raise investment or sell the company, investors, buyers and their lawyers scrutinise the “cap table and the allotment history” during due diligence and gaps or defects (missing resolutions, no valuation where one was needed, unfiled PAS-3, no certificates, an inaccurate register or a backdated allotment) can hold up or derail the deal. A defective allotment done years earlier surfaces at exactly the wrong moment. So doing each allotment properly, with clean records, is an investment in every future transaction. We do allotments right the first time and can regularise past ones, so your cap table stands up to due diligence.
We allotted shares in the past but didn't do it properly, can you help?
Yes, this is common, especially with smaller companies and startups that issued shares informally in their early days (missing resolutions, no valuation where needed, no PAS-3 filing, no certificates or an inaccurate register). We review your past allotments, identify what wasn’t done properly and help regularise the position as far as possible, completing missing documentation, making any belated filings that can be made (which may involve additional fees or penalties), issuing certificates, correcting the register and getting the records into order. What can be fixed depends on the nature of the defects and current rules and some things may need professional input via associated professionals. We assess honestly and tell you what can be regularised.
Why should I fix past allotment defects before I need to?
Because defective or improperly-documented past allotments “surface at the worst moment” during due diligence when you’re raising investment or selling, when investors and their lawyers scrutinise the cap table and allotment history and gaps can hold up or derail a deal. Leaving past errors unaddressed is a listed mistake. It’s far better to address them proactively, ideally before you need clean records for a transaction, than to have them emerge under deal pressure. We can review and regularise your past allotments now, so your records are clean and ready when a transaction comes, rather than a scramble mid-deal.
What can and can't be fixed in a defective past allotment?
It depends on the nature of the defects and the current rules. Often we can complete missing documentation, make belated filings that are still available (sometimes with additional fees or penalties), issue certificates that weren’t issued and correct the register, bringing the records into proper order. Some defects are straightforward to regularise; others are more complex and may need professional input via associated professionals and a few may have limits on how fully they can be cured. We assess your specific situation honestly, tell you what can be regularised and how and get your allotment records into the best possible order.
We're switching advisors and our cap table is a mess, can you sort it?
Yes, getting the cap table in order for companies switching advisors is one of the situations we handle. If your shareholding records, past allotments and filings are inconsistent or incomplete, we review the history, identify the gaps and defects, regularise what can be regularised (documentation, belated filings, certificates, register corrections) and get the cap table into clean, consistent order. Because we also handle your ROC, accounts and tax, we align the cap table with your other records. A clean, accurate cap table is essential before any fundraising or sale, we get it there.
Who needs share allotment services?
Companies issuing shares, in a range of situations: startups raising a round (investor allotments, usually private placement), companies raising capital (rights issue or preferential allotment), companies adding co-founders (preferential allotment), companies with ESOPs (allotment on option exercise), companies rewarding shareholders (bonus issue from reserves), companies converting loans to equity, private limited companies generally (various routes), growing businesses doing capital-raising allotments, companies regularising past allotment issues and companies switching advisors needing the cap table in order. Whatever your allotment situation, we handle it correctly.
What information and documents do you need?
The plan (who’s getting shares, why, how many), your company details (name, CIN, current capital), the current shareholding (existing shareholders and holdings), the allottee details (names, holdings, consideration), the price/consideration (issue price, amount), the authorised capital position (to see if SH-7 is needed), financials (for valuation where needed), board/shareholder details (for the resolutions and meetings) and the authorised director’s DSC (for filing). With these, we advise the route and handle the process. We give you a clear checklist based on your allotment.
How does your allotment process work, step by step?
Eleven steps: we understand the plan (who, why, terms); advise the correct route; check authorised capital (and increase via SH-7 first if insufficient); coordinate a registered valuer’s valuation where required; prepare the resolutions and offer documents; support passing the board/shareholder resolutions; handle the consideration (received and recorded correctly, in a separate account for a private placement); pass the allotment resolution within the timeline; help issue the share certificates and update the register; file PAS-3 on time and finalise the records so they reflect the new capital. Valuation, certification and DSCs are arranged through associated professionals.
What are the key timelines I need to be aware of?
Several and observing them is what keeps the allotment valid: filing “PAS-3” within the prescribed time after allotment (shorter for a private placement than some routes); issuing “share certificates” within the prescribed time (generally ~two months of allotment); for a private placement, “allotting the shares” within the prescribed period after receiving the money (kept in a separate account until then); plus timelines around the resolutions and any SH-7 authorised-capital increase. It’s a myth that timelines are flexible, the PAS-3 and certificate deadlines are binding. We map the full timeline at the start and manage each step to its deadline, so nothing is late.
How long does a share allotment take?
It depends on the route and what’s involved, a straightforward allotment moves faster than one needing an authorised-capital increase (SH-7) and a registered valuer’s valuation first. The process runs through the route decision, any SH-7 increase, the resolutions and approvals (which may need a general meeting for a special resolution), the valuation where required, receipt of consideration, the allotment, certificates, register update and PAS-3 filing, each with its own timeline. Rushing and missing steps (a listed mistake) risks a defective allotment, so it’s planned properly rather than hurried. We map a realistic timeline for your specific allotment and manage each step to it.
How much does a share allotment cost?
It’s priced by the route and what’s involved, a straightforward allotment costs less than one needing an authorised-capital increase (SH-7) and a registered valuer’s valuation, plus the MCA filing fees (PAS-3 and SH-7 where applicable), any valuation fee through the associated registered valuer, stamp duty on the certificates and professional certification, all at a fee agreed upfront with 18% GST. We give a clear, all-in quote covering the whole allotment so there are no surprises and can bundle it with your ROC, accounts and tax. Given that a clean, valid allotment protects every future fundraise or sale, it’s a worthwhile, proportionate spend.
Can you handle a share allotment if I'm outside Vasai-Virar?
Yes. Share allotment is largely document-based and filed online with the MCA, so we handle it for companies across the Vasai-Virar and Palghar region, the wider Mumbai Metropolitan Region and beyond. You tell us your plan (who you’re allotting to, why, how many, on what terms) and we advise the route, check authorised capital (increasing it first if needed), prepare the resolutions and offer documents, coordinate a registered valuer’s valuation where required, manage the consideration and allotment, help issue certificates and update the register and file PAS-3 on time, all largely online, with valuation, certification and DSCs via associated professionals. For local clients we’re happy to meet in person at our office on Mahatma Gandhi Road, near T.B. College. Distance is no barrier.
Why should I trust Digital Vasai Tax with my share allotment?
Because we carry out your allotment correctly and completely, advising the right route, checking the authorised capital, preparing the resolutions and documents, coordinating valuation through an associated registered valuer where required, managing the consideration, certificates and register and filing PAS-3 on time, so the allotment is valid, the ownership cleanly recorded and the deadlines met. We’re honest about governance: an allotment must be a genuine issue for consideration actually received and we won’t shortcut or backdate. Because we also handle accounts, tax and other ROC compliance, everything is consistent and in one place. We reply quickly on call and WhatsApp. Getting companies’ share issues done properly, so they stand up to scrutiny, is what earns lasting trust. `[Customize this answer — add years in practice, allotments handled, or a client example.]`
