Step-by-step procedure (Private Ltd / Unlisted)

 Pre-checks (before Board-1)

1. Check AOA authority & capital headroom
   • Ensure your Articles allow further issue/renunciation; if not, alter AOA (Special Resolution → MGT-14 within 30 days).
   • Ensure authorised share capital ≥ proposed paid-up post-issue. If not, increase authorised capital by Ordinary Resolution and file SH-7 within 30 days (no MGT-14 for an ordinary resolution; MGT-14 applies only if you also alter AOA by special resolution).
2. Fix “record date” logic & draft Offer Letter (ratio, price, timelines, renunciation, bank details). No statutory format prescribed, but include key disclosures and proof-of-delivery mode.

1) Board Meeting 1 (“Board-1”)

Board approves: (i) rights issue, (ii) ratio/price, (iii) record date, (iv) Letter of Offer, (v) offer window & renunciation terms, (vi) opening date ≥ 3 days after dispatch.

For private companies, the offer window must be 15-30 days, but you may shorten it with written/electronic consent of ≥90% members. (Keep their consents on record.) 

Note: Shareholders’ meeting is not required for a plain rights issue.

MGT-14 for Board-1?

• Public companies: generally file MGT-14 for the Board resolution.
• Private companies: filing of Board resolutions under s.179(3) has been exempted; MGT-14 not required for such Board items (continue to file MGT-14 for any special resolutions, e.g., AOA alteration). Keep the board minutes tidy. 

2) Dispatch the Letter of Offer

• Send to all equity shareholders as on record date by registered post/speed post/e-mode with proof.
• Open the offer ≥ 3 days after dispatch; keep open 15-30 days unless valid 90% consent for a shorter window. 

Include renunciation right (unless AOA restricts): a shareholder may accept all/part, renounce all/part, or decline. 

3) Receive applications & money

• Collect applications/renunciation letters and application money in the company’s bank account before close.
• For non-resident allottees, ensure FEMA pricing/approvals and prepare for FC-GPR filing later (see Step 7). 

4) Board Meeting 2 (“Board-2”) - Allotment

• Hold Board-2 after offer closes to approve allotment.
• Allot within 60 days of receipt of application money. Unsubscribed portions can be disposed of by the Board in a manner not disadvantageous to the company/shareholders (and consistent with the offer/renunciation terms). 

5) MCA filing - PAS-3 (Return of Allotment)

• Due date: within 30 days from the date of allotment.
• Attachments: list of allottees, certified Board resolution for allotment, and other supporting as applicable. 

(Repeat note) MGT-14 is not required for private companies for Board resolutions under s.179(3); file it only if you have passed any special resolution (e.g., AOA alteration). 

6) Issue Share Certificates (SH-1) & stamp duty

• Form SH-1 must be issued within 2 months of the allotment date, signed by two directors (and CS if any).
• Stamp duty is payable on each share certificate-rate & method are state-specific (e-stamp/franking/adhesive). Many guides cite 0.005% “uniform” rates, but several states continue to levy their own rates-so check your State/UT Schedule (Inspector General of Registration / Stamps portal) or take local adjudication advice. 

Practical: pay stamp duty before signing/delivering SH-1; keep the e-stamp/franking proof stapled to the certificate stub/issue register. 

7) If any allottee is Non-Resident (rights or renunciation)

• Ensure FEMA eligibility & pricing (for unlisted companies, price to non-resident cannot be lower than offered to residents in a rights issue).
• File FC-GPR on RBI FIRMS portal within 30 days of allotment, with AD Bank verification (FIRC, KYC, CS certificate, valuation/pricing note, list of allottees, board resolution). 

8) Post-allotment secretarial updates

• Update Register of Members (MGT-1) for every allottee.
• If in demat, intimate the depository for credit.
• Maintain copies of: offer letters, proofs of dispatch, renunciation letters, applications, bank proofs, board minutes, PAS-3 ack, SH-1 stubs, stamp duty proof. 

What you do NOT do in a Rights Issue

• You do not cancel existing share certificates merely because of a rights allotment. You issue fresh certificates (SH-1) for the new shares (unless a member separately requests consolidation/split). 

One-page Checklist (sequence & due dates)

1. Pre-checks: AOA + capital headroom; SH-7 if you first increase authorised capital (file within 30 days). 
2. Board-1: approve rights issue, offer letter, dates, ratio, price, renunciation; (MGT-14 not for private co’s board items). 
3. Dispatch Offer Letter: open ≥ 3 days later; keep open 15-30 days (shorter with ≥90% members’ written e-consent). 
4. Collect applications & money during window.
5. Board-2: approve allotment (within 60 days of receipt of money). 
6. PAS-3: file within 30 days of allotment (attach list of allottees + BR). 
7. SH-1 Certificates: issue within 2 months of allotment; pay state stamp duty on each certificate (e-stamp/frank). 
8. Update MGT-1 (Register of Members); if non-resident allottee, FC-GPR within 30 days of allotment. 

Renunciation & undersubscription

• Renunciation: Allowed unless AOA restricts; reflect the right to renounce in the Offer Letter. 
• Unsubscribed shares: Board may dispose them in a manner not disadvantageous to the company/shareholders (often to those who applied for additional shares). 

Sources you shared (key points leveraged)

• ICSI procedural PDF (steps, renunciation, SH-1 timing). 
• ClearTax (15-30 day window; PAS-3; SH-1 timelines; MGT-14 public vs private). 
• Taxguru (stepwise rights issue; 90% consent shortcut; SH-7/MGT-14 nuances; PAS-3). 
• Aureus Law (practical steps & offer window). 
• Jordensky (practical PAS-3/issue flow). 
• MGT-1 requirement under the Rules. 
• Stamp duty on share certificates (state-wise practice & caution). 

Want me to tailor this into:

• a fill-in-the-blanks Offer Letter,
• Board minutes (Board-1 & Board-2),
• a PAS-3 attachment (List of Allottees) template, and
• a state-specific stamp duty note for your state?

Applicable Rate

• Under the amended Indian Stamp (Collection of Stamp Duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019 (effective from 1 July 2020) the rate for transfer of shares (physical or demat) is 0.015% of the consideration / market value of the shares. 
• The rate for issue of share certificates is 0.005% of value. 
• Note: Even though stamp duty is a State subject under the Kerala Stamp Act, 1959, for transferable securities the uniform central rate applies. 

Computation for your case

Since one director is selling 1,99,000 shares at ₹100 each → Consideration = ₹1.99 crore (₹1,99,00,000)

Stamp duty = 0.015% of ₹1,99,00,000
= 0.00015 × 1,99,00,000
= ₹29,850

So your company should ensure that ₹29,850 is the stamp duty payable on the share transfer instrument.

Additional notes / caveats

• Make sure that the “consideration” is properly recorded (i.e., ₹100 x 1,99,000) and the instrument shows the same.
• The stamp duty must be affixed before or at the time of execution of the transfer instrument (e.g., Form SH-4). 
• If the shares are in demat form or the transfer is effected via demat, same rate (0.015%) applies. 
• Although you are transferring, not issuing new shares, if at any point you issue new shares to the transferee then the 0.005% rate would apply for the SH-1 certificate issuance.
• Keep evidence of stamp duty payment, share certificate endorsement/transfer, register updates etc.

   Dr. Muhammed Mustafa C.T
   Senior Tax Consultant, BRQ Associates
  +91 96331 81898
   brqassociates@gmail.com |  www.brqassociates.com