The Ministry of Corporate Affairs in its notification dated 11th May 2020 has issued a clarification on the mode of issue of notice referred to in section 62(1)(a)(i) of Companies Act read with section 62(2) of the Act for rights issue by listed companies.
A company that proposes to increase its subscribed capital by the issue of further shares, shall be offered to persons who, at the date of the offer, are holders of equity shares of the company in proportion by sending a letter of offer specifying the details of the shares.
Further, the notices shall be dispatched through registered post or speed post or any other mode having proof of delivery to all the existing shareholders. However due to the difficulties faced by companies in sending notices through postal or courier services on account of the threat posed by Covid-19.
Therefore the ministry has clarified that for rights issues opening up to 31st July 2020, in case of listed companies, the inability to dispatch the notice to their shareholders through registered post or speed post or courier would not be viewed as a violation of section 62(2) of the Act.
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