## Further Issue of Share Capital – Section 62
Where a company wishes to increase its subscribed capital by issuing further shares, the shares must be offered in one of three permitted modes.
### Mode 1: Rights Issue (to Existing Equity Shareholders)
Shares are offered to existing equity shareholders in proportion to paid-up capital by sending an offer letter (notice) specifying:
- Number of shares offered;
- Time period for acceptance — not less than 7 days but not exceeding 30 days from the date of offer;
- Shorter period allowed for a private company if 90% of members (in number) give consent.
- If offer is not accepted within time, it is deemed declined; and
- The right to renounce the shares (unless AOA provides otherwise).
Dispatch: The offer letter must be dispatched at least 3 days before opening of issue through registered post, speed post, courier, electronic mode or any other mode with proof of delivery. (Shorter dispatch period available to a private company with 90% members' consent.)
Disposal of declined shares: Upon intimation of decline or expiry of the time, the Board shall dispose of the shares in a manner that is not disadvantageous to the shareholders or to the company.
### Mode 2: Employees Stock Option Scheme (ESOP)
Shares offered to directors, officers or employees of the company (or its holding/subsidiary) to purchase shares at a pre-determined price on a future date, subject to:
- Special Resolution (Ordinary Resolution suffices for a private company that has not defaulted u/s 92 or 137); and
- Other prescribed conditions.
### Mode 3: Preferential Allotment (to Any Person)
Shares may be offered to any person, if authorised by Special Resolution, for cash or consideration other than cash.
> Where consideration is non-cash, price must be determined by the valuation report of a registered valuer and other prescribed conditions met.
### Important Points
1. Section 62 is not applicable to a Nidhi Company.
2. While offering rights shares, a company cannot ignore any existing equity holder — shares must be offered to all existing equity holders proportionate to their holding.