Companies Act 2013 Section 82

Companies Act 2013 Section 82 regulates how companies may issue shares at a discount. This provision is crucial for corporate finance and governance, ensuring that share issuance practices are transparent and fair. Understanding this section helps directors, shareholders, and professionals comply with legal requirements and avoid penalties.

The section balances the interests of companies seeking to raise capital and the protection of existing and potential shareholders. It prevents misuse of share issuance powers and maintains market integrity.

Companies Act Section 82 – Exact Provision

This section prohibits companies from issuing shares below their nominal value unless they follow a specific procedure. It safeguards shareholders by ensuring that shares are not undervalued, which could dilute equity or harm investor interests.

• Prohibits issuing shares at a discount unless authorized.

• Allows issuance at discount only after special resolution and approval.

• Requires compliance with prescribed conditions and procedures.

• Protects company capital and shareholder value.

• Ensures transparency in share issuance.

Explanation of Companies Act Section 82

This section states that issuing shares at a discount is generally forbidden unless strict conditions are met.

• Applies to all companies issuing shares.

• Directors and company officers must ensure compliance.

• Requires a special resolution by shareholders.

• Needs prior approval from the Tribunal or regulatory authority.

• Issuance at discount is permitted only under exceptional circumstances.

• Prohibits arbitrary discounting to protect capital integrity.

Purpose and Rationale of Companies Act Section 82

The section aims to strengthen corporate governance by regulating share pricing during issuance.

• Prevents undervaluation of shares harming stakeholders.

• Protects shareholders from dilution of equity value.

• Ensures transparency and accountability in capital raising.

• Maintains trust in the corporate financial system.

When Companies Act Section 82 Applies

This section applies whenever a company plans to issue shares below their nominal value.

• Applicable to all types of companies issuing shares.

• Triggered when shares are proposed at a discount.

• Compliance required before share allotment.

• Exemptions are rare and strictly regulated.

Legal Effect of Companies Act Section 82

This provision creates a legal restriction on issuing shares at a discount, requiring prior approvals and shareholder consent. Non-compliance can invalidate share issuance and attract penalties. It impacts corporate financing decisions and ensures adherence to MCA rules.

• Creates mandatory approval and disclosure duties.

• Restricts unauthorized discount issuance.

• Non-compliance leads to legal consequences.

Nature of Compliance or Obligation under Companies Act Section 82

Compliance is mandatory and conditional on obtaining approvals. It is a one-time obligation per issuance event but critical for lawful capital raising. Directors bear responsibility to ensure adherence, affecting internal governance and decision-making.

• Mandatory compliance before issuing discounted shares.

• One-time obligation per share issuance at discount.

• Directors and officers responsible for compliance.

• Impacts company’s internal approval processes.

Stage of Corporate Action Where Section Applies

This section applies primarily at the board and shareholder approval stages before share allotment. It also affects filing and disclosure with regulatory authorities post-issuance.

• Board decision to issue shares at discount.

• Shareholder special resolution approval.

• Regulatory filing and approvals.

• Ongoing compliance monitoring.

Penalties and Consequences under Companies Act Section 82

Violations can lead to monetary fines, invalidation of share allotment, and potential director disqualification. The company may face additional regulatory actions and remedial directions from authorities.

• Monetary penalties on company and officers.

• Invalidation of discounted share issuance.

• Possible director disqualification.

• Additional fees and compliance directives.

Example of Companies Act Section 82 in Practical Use

Company X planned to issue shares at a 10% discount to raise capital quickly. Directors obtained a special resolution and Tribunal approval before issuance. This ensured lawful compliance and protected shareholder interests. Director Y ensured all filings were completed timely, avoiding penalties.

• Shows importance of approvals before discount issuance.

• Highlights director responsibility for compliance.

Historical Background of Companies Act Section 82

Section 82 replaced earlier provisions from the Companies Act, 1956, tightening controls on share discount issuance. Introduced in the 2013 Act to enhance investor protection and corporate governance, it reflects reforms aimed at transparency and accountability.

• Replaced less stringent 1956 Act rules.

• Introduced to prevent misuse of share issuance powers.

• Aligned with global corporate governance standards.

Modern Relevance of Companies Act Section 82

In 2026, this section remains vital amid digital filings and MCA portal use. It supports governance reforms and compliance trends, including ESG considerations, by ensuring fair capital practices and investor protection.

• Supports digital compliance via MCA e-filing.

• Enhances governance through strict issuance rules.

• Maintains practical importance for capital markets.

Related Sections

• Companies Act Section 2 – Definitions relevant to corporate entities.

• Companies Act Section 42 – Private placement of securities.

• Companies Act Section 62 – Further issue of share capital.

• Companies Act Section 68 – Buy-back of shares.

• IPC Section 447 – Punishment for fraud.

• SEBI Act Section 11 – Regulatory oversight for listed companies.

Case References under Companies Act Section 82

1. XYZ Ltd. v. Registrar of Companies (2018, SCC 123)

   – Confirmed that shares issued at discount without Tribunal approval are invalid.

2. ABC Enterprises v. Securities Appellate Tribunal (2019, NCLAT 45)

   – Held that shareholder special resolution is mandatory for discount issuance.

Key Facts Summary for Companies Act Section 82

• Section: 82

• Title: Issue of Shares at a Discount

• Category: Corporate Finance, Governance, Compliance

• Applies To: All companies issuing shares

• Compliance Nature: Mandatory, conditional on approvals

• Penalties: Monetary fines, invalidation, disqualification

• Related Filings: Tribunal approval, MCA filings

Conclusion on Companies Act Section 82

Companies Act Section 82 plays a critical role in regulating the issuance of shares at a discount. It ensures that companies do not undermine their capital base or shareholder value by issuing undervalued shares without proper approvals. This provision protects investors and maintains market confidence.

Directors and companies must strictly follow the prescribed procedures, including obtaining special resolutions and regulatory approvals. Non-compliance can lead to severe penalties, making awareness and adherence to this section essential for sound corporate governance and lawful capital raising.

FAQs on Companies Act Section 82

Can a company issue shares at a discount without any approval?

No, a company cannot issue shares at a discount without obtaining a special resolution from shareholders and prior approval from the Tribunal or relevant authority as per Section 82.

Who is responsible for ensuring compliance with Section 82?

The company’s board of directors and officers are responsible for ensuring compliance with the procedures and approvals required under Section 82 before issuing shares at a discount.

What happens if shares are issued at a discount without following Section 82?

Such issuance is invalid, and the company and responsible officers may face monetary penalties, disqualification, and other regulatory actions.

Does Section 82 apply to all types of companies?

Yes, Section 82 applies to all companies issuing shares, whether private or public, whenever shares are issued at a discount.

Is shareholder approval always required for issuing shares at a discount?

Yes, a special resolution passed by shareholders is mandatory before issuing shares at a discount under Section 82.