Issue of Share Warrants

[CA Gunjan]

Dear Members,

Pls guide can a Private Limited company issue Share Warrants, as there is no provision under companies act, 2013.

[Muthu kumaran]

Under the Companies Act, 1956, provision for issue of Share Warrant by public limited companies was there under Section 114 & 115. However, there is no such provision under the Companies Act, 2013. Can both private & public companies issue share warrant now or is it completely prohibited? If the issue is allowed, what is the procedure to be followed for the same? 

ROC’s views : Concept of share warrant no longer exists in CA, 2013.

On 4 January 2017 at 20:57, CA Gunjan <gunjan...@gmail.com> wrote:

Dear Members,

Pls guide can a Private Limited company issue Share Warrants, as there is no provision under companies act, 2013.

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Regards,

Muthukumaran

[Supriya]

Hi,

The Companies Act 2013, does not recognise share warrants explicitly though the RBI permits them to be issued to foreign investors, subject to certain conditions (You can look up the latest RBI notification on this). It is common practise for private companies to issue warrants to their foreign investors, especially for start ups. 

Further, the recent June 29, 2016 notification from MCA has referred to a convertible note convertible into equity shares or repayable within a period not exceeding five years from the date of issue) in a single tranche, from a person. (You can look up this notification for further details).

Regards  

Supriya