Section 42 of the Companies Act, 2013 (‘CA 2013’) relating to private placement norms for issue of securities, was substituted by the Companies (Amendment) Act, 2017 w.e.f. 07.08.2018. Simultaneously, Companies (Prospectus and Allotment of Securities) Rules, 2014 was amended by the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2018 w.e.f. 07.08.2018. The amendments have been made by the Ministry of Corporate Affairs keeping in mind the suggestions of the Companies Law Committee.
After the Companies (Amendment) Act, 2017 w.e.f. 07.08.2018, an issuer is not permitted to utilise any monies raised through private placement till the allotment is complete and the Return of Allotment (PAS-3) is filed with the Registrar of Companies (ROC) within 15 days of allotment. Proviso to Section 42(4) provides as under-
“Provided that a company shall not utilise monies raised through private placement unless allotment is made and the return of allotment is filed with the Registrar in accordance with sub-section (8)”
Further, the timeline for filing the return of allotment with the ROC has been reduced from 30 days to 15 days from the date of allotment. The relevant provision of sub-section (8) of amended Section 42 of CA 2103 are as under-
“(8) A company making any allotment of securities under this section, shall file with the Registrar a return of allotment within fifteen days from the date of the allotment in such manner as may be prescribed, including a complete list of all allottees, with their full names, addresses, number of securities allotted and such other relevant information as may be prescribed.”
Further, in respect of filing of particular forms and other relevant information, Rule 6 of Companies (Prospectus and Allotment of Securities) Rules, 2014 (as amended by the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2018 w.e.f. 07.08.2018) provides as under-
“(6) a return of allotment of securities under section 42 shall be filed with the Registrar within fifteen days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registration Offices and Fee) Rules, 2014 along with a complete list of all the allottees containing-
(i) the full name, address, Permanent Account Number and E-mail-ID of such securityholder;
(ii) the class of security held;
(iii) the date of allotment of security;
(iv) the number of securities held, nominal value and amount paid on such securities; and particulars of consideration received if the securities were issued for consideration other than cash.”
It is also pertinent to mention that if there is delay in filing of PAS-3 within the prescribed period of 15 days of allotment, the company, its promoters and directors shall be liable to a penalty of Rs. 1000 per day subject to the maximum of Rs. 25 lacs. The relevant provision of sub-section (9) of amended Section 42 of CA 2103 are as under-
“(9) If a company default in filing the return of allotment within the period prescribed under sub-section (8), the company, its promoters and directors shall be liable to a penalty for each default of one thousand rupees for each day during which such default continues but not exceeding twenty-five lakh rupees.”
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Hi sir,
During the incorporation of my company I opened a bank account in Axis Bank in the name of company. Then I called for subscription of shares by members and received the subscription money in SBI Account (another account opened in the name of company). Is it legally valid?