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Capital Markets & IPO · Step 6 of 7

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Capital Markets & Investment Banking

FPO / Rights Issue — SEBI Filing

FPO & Rights Issue

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Overview

An FPO — Follow-on Public Offer — is the issue of shares by an already-listed company to raise further capital, and a rights issue is the issue of shares to existing shareholders in proportion to their holdings. Both are governed by the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 and the Companies Act 2013 — the issue under Section 62 of the Act and the offer document and disclosure regime of the ICDR Regulations. The issue is processed through the exchanges and the SEBI filing framework.

The FPO and rights issue are the listed company's equity toolkit after the IPO. The rights issue is the fair route — existing shareholders get the first claim, and the subscription decides how much is raised; the FPO is the wider route — new and existing investors participate through the book building or fixed price process. Both require the offer document, the board and shareholder approvals, the filings with SEBI and the exchanges, and the compliance through listing of the new shares.

The cost of a defective issue is regulatory and financial: a document with incomplete disclosure invites SEBI's scrutiny and the investors' claims; a rights issue that misprices the entitlement or mishandles the renunciation is a governance event; and the timeline failures — a delayed listing of the new shares — leave the investors holding paper without the market. Each is cheaper to prevent in the drafting than to fix after the issue opens.

This service is for listed companies planning FPOs and rights issues. We structure the issue under Section 62 of the Companies Act 2013 and the ICDR Regulations 2018, prepare the offer document and the disclosures, manage the board and shareholder approvals and the SEBI and exchange filings, coordinate the issue process and the allotment, and support the listing of the new shares.

How It Works

  1. 1

    Issue Structuring

    We structure the FPO or rights issue — size, pricing, timing — under the ICDR Regulations 2018.

    Harun Raaj & Associates does this1-2 weeks
  2. 2

    Offer Document & Disclosures

    We prepare the offer document and the disclosures required by the Regulations.

    Harun Raaj & Associates does this2-4 weeks
  3. 3

    Approvals & Filings

    We manage the board and shareholder approvals under Section 62 and the SEBI and exchange filings.

    Harun Raaj & Associates does this2-4 weeks
  4. 4

    Issue & Allotment

    We coordinate the issue process, the subscription and the allotment.

    Harun Raaj & Associates does this2-4 weeks
  5. 5

    Listing & Post-Issue

    We support the listing of the new shares and the post-issue compliance.

    Harun Raaj & Associates does this1-2 weeks

Frequently Asked Questions

What is a Farmer Producer Organisation and under which law is it registered in India?
A Farmer Producer Organisation (FPO) is a legal entity formed by primary producers — farmers, fishermen, or other agricultural producers — to improve their bargaining power and access markets collectively. FPOs may be registered as a Producer Company under Section 378A of the Companies Act 2013 (inserted by the Companies Amendment Act 2020), as a Cooperative Society under the respective State Cooperative Societies Act, or as a Society under the Societies Registration Act 1860. The most commercially viable form is the Producer Company under the Companies Act 2013, as it combines cooperative principles with corporate governance, allows equity participation, and can access the Government of India's scheme for Formation and Promotion of 10,000 FPOs launched by the Ministry of Agriculture and Farmers Welfare with a budget outlay of Rs 6,865 crore.
What are the minimum membership and capital requirements to register an FPO as a Producer Company?
Under Section 378C of the Companies Act 2013, a Producer Company must have a minimum of 10 producers as members (individuals) or 2 producer institutions as members at the time of incorporation. There is no statutory minimum paid-up capital prescribed for a Producer Company, unlike for other types of companies, but the Companies Act 2013 requires that shares be issued only to members who are primary producers. The Articles of Association must restrict the transfer of shares to persons who are not producers, and the voting rights follow a one-member-one-vote principle under Section 378E regardless of shareholding, distinguishing it from a regular private limited company. Central and State Government equity support is available under the FPO scheme through NABARD, SFAC, and NCDC as implementing agencies.
What income tax exemptions are available to a registered FPO?
Under Section 10(1) of the Income Tax Act 1961, agricultural income is exempt from income tax irrespective of the entity type, so FPO income from cultivation and sale of produce by its own members is generally agricultural income. Section 80PA of the Income Tax Act 1961 (inserted by the Finance Act 2018) provides a 100% deduction on profits and gains of a Producer Company derived from eligible business for five consecutive assessment years starting from the year of registration, subject to the total turnover not exceeding Rs 100 crore in the financial year. For AY 2026-27 and earlier (ITA 1961 applicable), this deduction is available; for TY 2026-27 onwards under the Income Tax Act 2025, equivalent provisions are expected to be mapped. Additionally, cooperative FPOs may claim deduction under Section 80P for business income if structured as a cooperative society.
What are the key annual compliance obligations for an FPO registered as a Producer Company?
A Producer Company registered under the Companies Act 2013 must hold an Annual General Meeting within 90 days of the close of each financial year under Section 378ZK, and must present audited financial statements and the Board's report. Annual filings with the Registrar of Companies include Form AOC-4 (financial statements) within 60 days of the AGM, and Form MGT-7A (annual return for small companies or OPCs, applicable if turnover is below Rs 2 crore) or Form MGT-7 otherwise, within 60 days of the AGM. The accounts must be audited by a CA appointed under Section 139 of the Companies Act 2013. FPOs receiving government grants under the 10,000 FPO scheme must also submit utilisation certificates to the implementing agency (NABARD/SFAC/NCDC) per the terms of the scheme guidelines.
Can an FPO export its produce, and are there any special schemes for exporting FPOs?
Yes, an FPO can export agricultural produce by obtaining an Import Export Code from the Directorate General of Foreign Trade under Section 7 of the Foreign Trade (Development and Regulation) Act 1992. Exporting FPOs are eligible for benefits under the Agricultural and Processed Food Products Export Development Authority (APEDA) Export Development Fund, and may avail duty drawback under Section 74 or Section 75 of the Customs Act 1962 on inputs used in exported produce. The Agricultural Export Policy 2018 specifically encourages FPO-led cluster-based exports and provides for dedicated export-focused FPOs with infrastructure support. For GST purposes, exports are zero-rated under Section 16 of the IGST Act 2017, so the FPO may either export under a Letter of Undertaking without paying IGST or claim a refund of accumulated input tax credit under Section 54 of the CGST Act 2017.

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