A private placement is a sale of stock shares or bonds to pre-selected investors and institutions rather than on the open market. Private placemen is an alternative to an initial public offering (IPO) for a company seeking to raise capital for expansion. Article contains Checklist for Issue of shares on private placement basis:

Checklist for Issue of shares on private placement basis

1. Drafting and Preparation of Private Placement Offer cum Application Letter (PPOAL) Sec 42 read with Rule 14 of The Companies (Prospectus and Allotment of Securities) Rules, 2014
2. Obtain Draft Valuation Report for Preferential Issue of shares before Board Meting Sec 42 read with 62(1)(c ), Rule 13 of the  Companies (Share Capital and Debentures) Rules, 2014 and 247
3. Send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means. 7 days notice
4. Conduct the Board Meeting to pass the following resolutions:

Issue of Equity Shares subject to shareholders’ approval on private placement basis (Section 179 (3) (c))

Approve Notice of EGM and authorize the Secretary/Directors in this regard. Explanatory Statement of the notice should contain the disclosures as mentioned in the Rule 13 of The Companies (Share Capital and Debentures) Rules, 2014.

Approval of draft PPOAL (PAS-4), opening/identifying of separate bank account and allotment of shares etc.

Sec 42 read with 62(1)(c) and 179
5. Send notice (along with explanatory statement) of the General Meeting to members, Directors as per Sections 101 and 102 of the Companies Act, 2013. Section 62 of CA, 2013 read with rule 13 of Companies (Share Capital & Debentures) Rules, 2014 read with rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014
6. Hold EGM for:
Passing of Special Resolution for Issue of Equity Shares on  Private Placement BasisApproval of PAS-4
Sec 42 and 62(1)(c) read with Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014
7. File MGT-14 for issue of securities in complying of Section 179(3)(c) of Co’s Act, 2013 within 30 days of date of issue.
8. Circulation of PPOAL under PAS – 4 to the proposed Allottees through registered post or speed post or through electronic mode within 30 days of recording their names to all identified persons.  Sec 42 read with Rule 14 (3) of Companies (Prospectus and Allotment of Securities) Rules, 2014
9. Period in which amount is received by the Company from the investors
10. After receiving of share money again send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means.
11. Board Meeting to be convened for allotment of shares Sec 42 and 62(1)(c )
12. File Form PAS-3 (along with a complete list of all the allottees containing the details specified) within 15 days from the date of allotment of shares.  Sec 42 and 62(1)(c) read with Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014
13. For issuing of share certificate once again send Notice of Board Meeting in writing to every director at his address registered with the company by hand delivery or by post or by electronic means.
14. Pass the Board Resolution for issue of Share Certificate in Board Meeting.
15. Maintenance of list of identified persons in PAS-5. Sec 42 read with Rule 14 (4) of Companies (Prospectus and Allotment of Securities) Rules, 2014

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