Section 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—

1. Sub-section (5) omitted by Act 29 of 2020, s. 10 (w.e.f. 21-12-2020).

(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 1[or such lesser number of days as may be prescribed ] 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 share holders 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 2[of a registered valuer, subject to the
compliance with the applicable provisions of Chapter III and any other conditions as may be
prescribed].
3[(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be dispatched through
registered post or speed post or through electronic mode or courier or any other mode having proof of
delivery 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 Tribu nal 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, th e 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

1. Ins. by Act 29 of 2020, s. 11 (w.e.f. 22-1-2021).
2. Subs. by Act 1 of 2018, s. 14, for “of a registered valuer subject to such conditions as may be prescribed” (w.e.f. 9-2-2018).
3. Subs. by s. 14, ibid., for sub-section (2) (w.e.f. 9-2-2018).