Rules 10 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Three short rules in the Share Capital and Debentures Rules answer three narrow questions. Rule 10 lets an infrastructure company issue preference shares for more than twenty years but not more than thirty, with redemption from the twenty first year. Rule 12A sets the minimum period for acceptance of a rights offer: not less than seven days from the date of the offer. Rule 14 says a Board's announced decision recommending a bonus issue cannot later be withdrawn.
This article is as amended up to G.S.R. 43(E) dated 21 January 2023 per the MCA e-book. Later amendments should be checked. For share issues and returns, see our allotment of shares and PAS-3 service.
Rule 10: an infrastructure company may issue preference shares for more than twenty years, up to thirty, with at least ten percent redeemed each year from the twenty first year onwards (or earlier, proportionately, at the holders' option). Rule 12A: a rights offer stays open for acceptance not less than seven days from the date of the offer, from 1 April 2021. Rule 14: a Board decision recommending a bonus issue, once announced, cannot be withdrawn.
Rule 10: preference shares in infrastructural projects
Rule 10 reads: a company engaged in the setting up and dealing with of infrastructural projects may issue preference shares for a period exceeding twenty years but not exceeding thirty years, subject to the redemption of a minimum ten percent of such preference shares per year from the twenty first year onwards or earlier, on proportionate basis, at the option of the preference shareholders.
| Element | As printed |
|---|---|
| Who | A company engaged in the setting up and dealing with of infrastructural projects |
| Period of the shares | More than twenty years, not more than thirty years |
| Redemption | A minimum of ten percent of the shares per year |
| From when | The twenty first year onwards, or earlier, on proportionate basis, at the option of the preference shareholders |
Rule 10 is a special case alongside rule 9, which covers the issue and redemption of preference shares generally. Rule 9 has its own live post: preference shares under rule 9: special resolution and the SH-7 filing. The rule does not define "infrastructural projects"; check the Act and the relevant notifications. For the Act's text, read our section 55 guide on preference shares. The redemption of preference shares is also one of the events notified to the Registrar in Form SH-7 under rule 15; see our article on rules 1, 2, 3 and 15.
Example: Sagar Ports Infrastructure Limited issues preference shares with a term of twenty five years. Under rule 10, a minimum of ten percent of those shares is to be redeemed each year starting from the twenty first year, or earlier on a proportionate basis at the preference shareholders' option.
Rule 12A: the period for a rights offer
Rule 12A was inserted by the Amendment Rules, 2021, effective from 1 April 2021. For the purposes of sub-clause (i) of clause (a) of sub-section (1) of section 62, the time period within which the offer shall be made for acceptance shall be not less than seven days from the date of offer.
Three points arise from the wording:
- The period is a floor, "not less than seven days". An offer may stay open longer.
- The period runs "from the date of offer", not from the date the shareholder receives the letter.
- The rule fixes only the acceptance period for the offer under that sub-clause. The rest of the rights issue procedure sits in section 62 of the Act; see our posts on section 62: further issue of shares and rights issue procedure under section 62.
Example: Kestrel Pumps Private Limited sends a rights offer letter dated the 10th of a month. Under rule 12A the offer must be open for acceptance for not less than seven days from the 10th. A letter that closed the offer after five days would be short of the minimum.
Rule 14: bonus shares
Rule 14 provides: the company which has once announced the decision of its Board recommending a bonus issue shall not subsequently withdraw the same.
The rule is a single sentence. It says nothing on who may issue bonus shares, from what sources, or in what proportion; those matters sit in the Act. Read our section 63 guide on bonus shares and the post on bonus shares: reserves, partly paid shares and preference shares for the Act's conditions. The rule's test is the announcement: once the Board's decision recommending the bonus issue has been announced, it cannot later be withdrawn.
Example: The Board of Willow Dairy Limited announces its decision recommending a bonus issue. Later, the company's finance team asks if the Board can drop the proposal for the year. Under rule 14, it cannot withdraw the announced decision.
The three rules together
| Rule | Subject | Key figure or test | Related article |
|---|---|---|---|
| 10 | Preference shares in infrastructure projects | More than twenty, up to thirty years; ten percent a year from the twenty first year | Section 55 |
| 12A | Rights offer acceptance period | Not less than seven days from the date of offer | Section 62 |
| 14 | Bonus decision | Once announced, cannot be withdrawn | Section 63 |
For the other issue rules, see our article on rule 4 on differential rights and rule 13 on preferential allotment.
Need help with rights, bonus or preference share issues?
Each issue has its own approvals and filings, and a rights or bonus decision is hard to reverse. TaxClue can check the position, draft the resolutions and offer letters and file the allotment return; see our allotment of shares and PAS-3 page.
Key takeaways
- Rule 10: infrastructure companies may issue preference shares beyond twenty years, up to thirty, with at least ten percent redeemed per year from the twenty first year.
- Rule 12A: a rights offer must be open for acceptance not less than seven days from the date of the offer, from 1 April 2021.
- Rule 14: an announced Board decision recommending a bonus issue cannot be withdrawn.
- Rule 9 (preference shares generally) has its own live post.
- The Act's sections 55, 62 and 63 carry the rest of the rules for each topic.
Read next
- Rule 4: equity shares with differential voting rights
- Rule 13: preferential allotment
- Preference shares under rule 9
- Section 62 of the Companies Act, 2013: further issue of shares
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.