Form PAS-3: Return of Allotment of Shares – When and Why to File

Imagine your company as a garden, and the shares you issue as the seeds you sow. Each time you allot new shares, you're planting a seed that has the potential to grow and bear fruit in the form of capital and growth for your company. But just like how a gardener needs to keep a record of the seeds they've planted, companies in India need to report every allotment of shares to the Registrar of Companies (ROC). This is done through a form called Form PAS-3, also known as the Return of Allotment.

In this guide, we'll take a deep dive into Form PAS-3. We'll understand what it is, when it needs to be filed, and why it's crucial for your company's compliance. We'll also walk through the process of filling and filing the form step by step. By the end of this guide, you'll have a clear understanding of Form PAS-3 and how to ensure your company's share allotments are properly reported.

So, let's venture into the garden of Form PAS-3 and learn how to nurture your company's growth through proper compliance!

What is Form PAS-3?

Form PAS-3 is a return or a report that companies file with the ROC every time they allot shares. It's a way for companies to disclose the details of the shares they've issued, to whom they've issued them, and on what terms. Think of it as a birth certificate for your new shares.

The form captures several key details about the allotment, such as:

• The date of allotment

• The number and type of shares allotted (equity, preference, etc.)

• The face value and issue price of the shares

• The names, addresses, and folio numbers of the allottees

• The mode of payment for the shares (cash, other than cash, etc.)

• Whether the allotment is for a preferential issue, rights issue, bonus issue, etc.

  
  

By filing Form PAS-3, companies are fulfilling their statutory duty under Section 39(4) of the Companies Act, 2013, which mandates that a return of allotment be filed with the ROC within 30 days of allotment.

Why is Form PAS-3 Important?

Filing Form PAS-3 is important for several reasons:

1. Legal Compliance: As mentioned, filing Form PAS-3 is a statutory requirement under the Companies Act. Failing to file it within the prescribed time can result in penalties and legal consequences for the company and its directors.

   
   

2. Transparency: Form PAS-3 ensures transparency about a company's share capital structure. The details disclosed in the form become part of the company's public record, which can be accessed by investors, creditors, and other stakeholders. This helps build trust and credibility in the company.

   
   

3. Investor Protection: The form contains important information for investors, such as the terms of the allotment and the identity of the allottees. This helps protect investors' interests and ensures they have the necessary information to make informed decisions.

   
   

4. Capital Tracking: Form PAS-3 helps the ROC and other regulatory bodies keep track of a company's issued share capital. This is important for various compliance purposes, such as ensuring the company is not exceeding its authorized share capital.

   
   

Now that we understand what Form PAS-3 is and why it's crucial, let's look at when it needs to be filed.

When to File Form PAS-3

Form PAS-3 needs to be filed every time a company makes an allotment of shares. This could be for various reasons, such as:

1. Fresh Issue of Shares: When a company issues new shares to raise capital, either to new investors or existing shareholders.

2. Rights Issue: When a company issues new shares to its existing shareholders in proportion to their existing shareholding.

3. Bonus Issue: When a company issues new shares to its existing shareholders for free, usually by capitalizing its reserves.

4. Preferential Allotment: When a company issues shares to a select group of investors on preferential terms, such as a lower price or faster conversion to equity.

5. Conversion of Debentures or Loans: When a company converts its debentures or loans into equity shares.

6. Employee Stock Option Plan (ESOP): When a company issues shares to its employees under an ESOP scheme.

   
   

In each of these cases, the company must file Form PAS-3 with the ROC within 30 days from the date of allotment. For example, if a company allots shares on 1st June, it must file Form PAS-3 by 30th June.

What Happens if You Don't File on Time?

Failing to file Form PAS-3 within the 30-day deadline can have serious consequences:

1. Late Filing Fees: The company will have to pay additional fees for late filing. The late filing fees increase with the delay, with a different slab for every month of delay.

2. Penalties: If the delay extends beyond a certain period, the company and every officer of the company who is in default may be punishable with a fine.

3. Legal Action: In extreme cases of non-compliance, the ROC may initiate legal action against the company and its directors.

4. Reputational Damage: Late filing or non-filing of statutory forms can damage a company's reputation and raise red flags for investors and other stakeholders.

   
   

Therefore, it's crucial to ensure that Form PAS-3 is filed accurately and on time for every allotment of shares.

Now that we know when to file Form PAS-3, let's understand how to fill and file it correctly.

How to Fill and File Form PAS-3

Filling and filing Form PAS-3 involves several steps. Let's go through each of them in detail.

Step 1: Gather Necessary Information and Documents

Before you start filling the form, make sure you have all the necessary information and documents at hand. This includes:

• Details of the allotment (date, number of shares, issue price, etc.)

• List of allottees with their details (name, address, folio number, etc.)

• PAN and email ID of the company

• Digital Signature Certificate (DSC) of the director or company secretary signing the form

• Proof of payment for the shares allotted (bank statement, cash receipt, etc.)

• Board resolution or special resolution authorizing the allotment

  
  

Having these ready will make the form filling process smoother and faster.

Step 2: Download Form PAS-3

Form PAS-3 is available on the Ministry of Corporate Affairs (MCA) website. You can download it from the MCA's e-Forms download page. Make sure you have the latest version of the form.

Step 3: Fill the Form

Now, let's walk through the process of filling each section of Form PAS-3.

Section 1: Company Details

In this section, you need to provide your company's identification details, such as:

• Corporate Identity Number (CIN)

• Company Name

• Registered Office Address

• Email ID

  
  

Make sure these details are accurate and match with your company's records with the ROC.

Section 2: Allotment Details

This is the core section of the form where you provide the details of the allotment. This includes:

• Date of Allotment

• Type of Allotment (Rights Issue, Bonus Issue, Preferential Allotment, etc.)

• Number of Shares Allotted

• Nominal Amount per Share

• Total Nominal Amount

• Amount to be Paid on Each Share (including premium)

• Total Amount Payable (including premium)

• Amount Paid on Each Share

• Total Amount Paid

• Amount of Share Premium

• Amount of Share Premium Credited to Share Premium Account

  
  

Be very careful while filling this section. Double-check all the numbers and ensure they tally with your company's records and the allotment documents.

Section 3: Allottee Details

In this section, you need to provide the details of each person to whom shares have been allotted. This includes:

• Name

• Address

• Folio Number

• Number of Shares Allotted

• Nominal Amount per Share

• Total Nominal Amount

• Amount Paid per Share

• Total Amount Paid

  
  

If there are more than one allottees, you can add additional rows to accommodate their details.

Section 4: Share Capital Details

Here, you need to provide the updated details of your company's share capital after the allotment. This includes:

• Authorized Share Capital

• Issued Share Capital

• Subscribed Share Capital

• Paid-up Share Capital

  
  

Make sure these figures reflect the new shares allotted.

Section 5: Debt-Equity Ratio

If your company has incurred debt, you need to provide the debt-equity ratio in this section. This is calculated by dividing the total debt by the total equity.

Section 6: Attachments

In this section, you need to attach the supporting documents for the allotment. These may include:

• Board resolution or special resolution authorizing the allotment

• Valuation report (in case of allotment for consideration other than cash)

• List of allottees

• PAS-4 (Private Placement Offer Letter) or PAS-5 (Record of Private Placement Offers) in case of private placement

  
  

Make sure the attachments are in PDF format and don't exceed the prescribed size limit.

Section 7: Declaration

The final section of the form is the declaration. Here, the person signing the form (usually a director or company secretary) declares that:

• They have been authorized by the Board to sign the form

• All the requirements of the Companies Act and the rules made thereunder have been complied with

• All the information given in the form and attachments is true, correct and complete

  
  

The declarant needs to provide their details and digitally sign the form using their DSC.

Step 4: Pay the Filing Fee

There is a nominal filing fee for Form PAS-3, which needs to be paid online through the MCA portal. The fee can be paid using a credit card, debit card, or net banking.

Step 5: Submit the Form

Once you've filled all the sections, attached the necessary documents, and paid the fee, you're ready to submit the form. Before submitting, make sure you've:

• Previewed the form to check for any errors or omissions

• Digitally signed the form using the DSC

• Attached all the necessary documents

  
  

After you submit the form, the MCA portal will generate an acknowledgment with a Service Request Number (SRN). You can use this SRN to track the status of your form.

If the form is approved, the allotment will be registered and reflected in your company's records with the ROC. If there are any issues with the form, the ROC may raise queries or reject the form. In such cases, you'll need to rectify the issues and re-submit the form.

Key Points to Remember

• File Form PAS-3 within 30 days of every allotment of shares

• Ensure all the details provided in the form are accurate and match with the company's records and allotment documents

• Attach all the necessary supporting documents

• Pay the filing fee before submitting the form

• Digitally sign the form using a valid DSC

• Track the status of the form using the SRN

  
  

Conclusion

Allotting shares is a crucial activity for any company, as it directly impacts its capital structure and ownership pattern. Form PAS-3 plays a vital role in ensuring that this activity is properly reported and disclosed to the regulatory authorities.

While filing Form PAS-3 may seem like a routine compliance task, it's essential to give it the attention and diligence it deserves. Errors or delays in filing the form can lead to serious consequences, including penalties, legal action, and reputational damage.

But compliance doesn't have to be a burden. With the right knowledge and support, you can ensure your company's share allotments are always in order. This is where Fiscal Flow comes in.

As your trusted compliance partner, Fiscal Flow can help you navigate the complexities of share allotments and Form PAS-3 filing. Our team of experts can:

• Guide you on the process and requirements of Form PAS-3

• Help you gather and prepare the necessary documents

• Fill and file the form on your behalf

• Track the status of the form and handle any queries from the ROC

• Provide timely reminders for filing the form for future allotments

  
  

With Fiscal Flow by your side, you can rest assured that your company's share allotments are always compliant and up-to-date.

But our services go beyond just Form PAS-3. We offer end-to-end support for all your company's compliance needs, from incorporation to annual filings, and everything in between. Our goal is to take the stress out of compliance, so you can focus on what you do best – running and growing your business.

If you have any questions about Form PAS-3 or any other compliance matter, our team is always here to help. Get in touch with us today to learn more about how we can support your company's compliance journey.

Remember, compliance is not just a box to tick – it's an investment in your company's future. By staying compliant, you're building trust with your stakeholders, avoiding costly penalties, and paving the way for sustainable growth.

So, let Fiscal Flow be your partner in this journey. Together, we can ensure that your company's share allotments – and all other compliance matters – are always in bloom.