Share Allotment and Form PAS-3 Filing
Every time your company issues new shares, it must report the allotment to the Registrar of Companies in Form PAS-3. The deadline is 30 days for a rights issue or other allotment, and only 15 days for a private placement under Section 42. We handle PAS-3 filing end to end, from resolutions to the MCA V3 form.
What it is
A share allotment is when your company issues fresh shares to someone for money or other consideration. The board passes a resolution and the allottees become shareholders. Form PAS-3 is the return of allotment that tells the ROC who got how many shares, at what price and for what.
The law sits in the Companies Act, 2013. Section 39(4) requires the return of allotment, and Section 62 governs a further issue of shares to existing holders (a rights issue), to employees or to anyone else by special resolution. Section 42 covers private placement, read with Rules 12 and 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014. PAS-3 is filed on the MCA V3 portal.
Who it applies to
Companies raising money from their own shareholders
A rights issue under Section 62(1)(a) offers new shares to existing equity holders in proportion to what they already hold. The allotment that follows needs PAS-3 within 30 days.
Companies bringing in an investor
Say a Faridabad auto-parts maker wants a long-time customer to take a stake. An outsider like that comes in through a private placement under Section 42: PAS-4 offer letter first, PAS-3 within 15 days of allotment.
Allotments for something other than cash
Shares issued to pay for a property, a business or intellectual property, or issued to employees under an ESOP, are allotments too. Each one goes into a PAS-3.
Why it matters
Put the new shares on record
Until PAS-3 is approved, your paid-up capital on the MCA master data stays the same. Banks and due-diligence teams read that record, not your minute book.
Free the money for use
In a private placement, Section 42 keeps the application money in a separate account until the shares are allotted. Allot on time and the funds are free for the business.
Keep the next round open
No fresh private placement offer can be made until earlier allotments are completed or withdrawn. A messy round blocks the next one.
Rights issue vs private placement
| Rights issue (Section 62(1)(a)) | Private placement (Section 42) | |
|---|---|---|
| Who can subscribe | Existing equity shareholders, in proportion to their holding; they may renounce in favour of others unless the articles say otherwise | Identified persons named by the board, up to 200 in a financial year (QIBs and ESOP employees not counted) |
| Approval | Board resolution | Special resolution for each offer, plus board resolution |
| Offer document | Letter of offer; acceptance window of 15 to 30 days | PAS-4 offer letter; record of offers in PAS-5 |
| Price and valuation | Set by the board; no registered valuer report needed under Section 62(1)(a) | Basis of price disclosed with the valuer’s name; Section 62(1)(c) needs a registered valuer’s report |
| Money | As the letter of offer specifies | From the subscriber’s own bank account into a separate bank account; never cash |
| Allotment | After the offer period closes | Within 60 days of receiving the money, or refund within the next 15 days |
| PAS-3 due | 30 days from allotment | 15 days from allotment |
Private companies get one relief. Under the exemption notification of 5 June 2015, a rights offer can stay open for less than 15 days if 90% of the members agree in writing or electronically. Picture a Faridabad family company where four relatives hold every share and the bank wants more promoter money before renewing a limit. With everyone’s consent, the offer, payment and allotment can all happen in the same week.
Here is the catch with private placement: the money comes from outside, so every step in the table is mandatory, and one slip can draw a Section 42 penalty.
Documents required
From the company
- Memorandum and articles, to check authorised capital and the power to issue
- Certified board resolution for the allotment
- Special resolution and MGT-14, where the route needs one
- Valid digital signature certificate (DSC) of a director
About the allottees
- List of allottees with name, address, PAN, number of shares and amount paid
- Bank proof that money came from each allottee’s own account
- Demat account details, where the company must issue shares in demat form
For private placement or non-cash issues
- PAS-4 private placement offer letter and PAS-5 record of offers
- Registered valuer’s report on the price
- Stamped contract, where shares are issued for consideration other than cash
How it works
Check authorised capital and the shareholding route
Paid-up capital after the allotment cannot exceed authorised capital. If it would, we first increase the authorised capital and file SH-7. Then we pick the route: rights issue, private placement or preferential issue.
Fix the price and pass the resolutions
Where the price needs a registered valuer, we coordinate the report. We draft the board and special resolutions and file MGT-14 within 30 days.
Send the offer and track every rupee
Rights issue: we prepare the letter of offer. Private placement: PAS-4 goes to each identified person, and we keep PAS-5. In practice, the slip we see most is money paid from a spouse’s account, so we check every credit before allotment.
Allot the shares at a board meeting
For a private placement, the board must allot within 60 days of receiving the money.
File PAS-3 on the MCA V3 portal
We attach the allottee list and supporting papers and file within 15 or 30 days. Then we update the register of members and issue share certificates, or credit the shares to demat accounts.
Timelines
PAS-3 within 15 or 30 days
15 days from allotment for a private placement under Section 42. 30 days from allotment for every other allotment under Section 39(4).
Allot within 60 days of the money
In a private placement, shares must be allotted within 60 days of receiving the application money. If not, the money is refunded within the next 15 days, failing which 12% a year interest runs from the 60th day.
Certificates within two months
Section 56(4) requires share certificates within two months of allotment. For shares held in a depository, the company informs the depository immediately on allotment.
What happens if you file late
You pay 2× to 12× the fee
PAS-3 is an event-based form. Filed late, the additional fee is a multiple of the normal fee: 2× up to 30 days, 4× for 31–60 days, 6× for 61–90 days, 10× for 91–180 days and 12× beyond 180 days.
The ROC can add a daily penalty
For an ordinary allotment, ₹1,000 a day, up to ₹1 lakh, on the company and each officer in default. For a private placement, ₹1,000 a day up to ₹25 lakh on the company, its promoters and directors.
A flawed placement costs more
Breaking the Section 42 rules can draw a penalty up to the amount raised or ₹2 crore, whichever is lower. Small companies, OPCs and recognised startups get half penalties under Section 446B.
Frequently asked questions
What is the due date for filing PAS-3?
It depends on the route. For a private placement under Section 42, PAS-3 is due within 15 days of the allotment. For a rights issue, bonus, ESOP or any other allotment, Section 39(4) and Rule 12 allow 30 days. The clock starts on the date the board allots the shares, not the date the money arrived. Diary it at the allotment meeting and you stay on time.
Is a valuation report needed for a share allotment?
For a preferential issue under Section 62(1)(c), yes: the price must be determined by a registered valuer’s report. A private placement letter must state the basis of the price and the valuer’s name. A rights issue to existing shareholders under Section 62(1)(a) does not need one under the Companies Act. Shares issued for non-cash consideration need a registered valuer’s report attached to PAS-3. We tell you upfront which case you are in.
How many people can a private placement be offered to?
Up to 200 persons in aggregate in a financial year, under Rule 14. Qualified institutional buyers and employees offered shares under an ESOP do not count towards the 200. The offer goes only to identified persons named by the board, through a PAS-4 letter, and each offer needs its own special resolution. For a typical startup round with a handful of investors, the limit is rarely a problem.
Can a private company shorten the rights issue period?
Yes, if 90% of its members agree. Section 62(1)(a) normally keeps the offer open for 15 to 30 days. The exemption notification of 5 June 2015 lets a private company give a shorter period with written or electronic consent of 90% of the members. PAS-3 is still due within 30 days of allotment.
What if the shares cannot be allotted within 60 days?
The money must go back. Under Section 42, if the company cannot allot within 60 days of receiving the application money, it must repay within 15 days after that. If it does not, it pays interest at 12% a year from the 60th day. The money cannot be used for anything else in the meantime. Fix the paperwork before money comes in and the 60-day window is plenty.
Do new shares have to be issued in demat form?
For many companies, yes. Rule 9A covers unlisted public companies, and Rule 9B covers private companies other than small companies. They must issue securities only in demat form, and the promoters’, directors’ and KMP’s holdings must be dematerialised before any offer. Subscribers also need their existing holdings in demat. A small private company is outside Rule 9B, but we check status every year because it can change.
What is the government fee for PAS-3?
It depends on authorised capital: ₹200 below ₹1 lakh, ₹300 for ₹1–5 lakh, ₹400 for ₹5–25 lakh, ₹500 for ₹25 lakh–₹1 crore and ₹600 at ₹1 crore and above. Late filing multiplies that fee by 2× to 12×, depending on the delay. Filed on time, it is a small cost next to the money you raise.
What if we allotted shares years ago and never filed PAS-3?
File it now, with the additional fee. The form accepts late filing at up to 12× the normal fee for delays beyond 180 days. The ROC can also levy the Section 39(5) or 42(9) penalty, and a private placement done without the Section 42 process may need more work. We rebuild the trail from bank statements and minutes, then file. Most old gaps can be closed in one go.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
The government fee for PAS-3 depends on your authorised capital:
| Authorised capital | PAS-3 normal fee |
|---|---|
| Below ₹1 lakh | ₹200 |
| ₹1 lakh to below ₹5 lakh | ₹300 |
| ₹5 lakh to below ₹25 lakh | ₹400 |
| ₹25 lakh to below ₹1 crore | ₹500 |
| ₹1 crore and above | ₹600 |
Filed late, this fee is multiplied 2× to 12×. MGT-14 for the special resolution and SH-7 for any capital increase carry their own fees.
Ready to begin?
Tell us who is putting money in, how much and at what price, and we will set up the allotment and file PAS-3 inside the deadline.