Company has to fulfill certain provisions while making Right Issue.

Answer: The statement is justified.

A right issue is an offer of further shares to existing equity shareholders in proportion to their holding. To protect existing shareholders, Section 62(1)(a) of the Companies Act, 2013 lays down these provisions:

• The shares must be offered to existing equity shareholders in proportion to the paid-up share capital held by them.
• The offer is made by a letter of offer sent by registered post, speed post or electronic mode at least 3 days before the issue opens.
• The offer must remain open for a minimum of 15 days and a maximum of 30 days; if not accepted within this period it is deemed declined.
• Unless the articles provide otherwise, a shareholder may renounce the shares offered in favour of any other person.
• After the offer period, the Board may dispose of the unsubscribed shares in a manner not disadvantageous to the shareholders and the company.
• A listed company must also follow the SEBI (ICDR) Regulations for rights issues.

Hence the company has to fulfil these provisions while making a right issue.