Private Placement As Per Section 42 Read With Rules Made Thereunder of The Chapter III, Part II of The Companies Act, 2013
Meaning of Private Placement:
A Private Placement means an issue of securities to a selected group of identified persons whose number shall not exceed 200 (excluding the qualified institutional buyers and employees of the company being offered securities under a scheme of employees stock option in terms of provisions of clause (b) of sub-section (1) of section 62) in a financial year.
Provided that a company making any offer or invitation made to qualified institutional buyers, or to employees of the company under a scheme of employees stock option as per provisions of clause (b) of sub-section (1) of section 62 shall not be considered while calculating the limit of two hundred persons.
For the purposes of sub-section (2) and sub-section (3) of section 42, a company shall not make an offer or invitation. to subscribe to securities through private placement unless the proposal has been previously approved by the shareholders of the company, by a special resolution. for each of the offers or invitations.
Provided further that this sub-rule shall not apply in case of offer or invitation for. non-convertible debentures, where the proposed amount to be raised through such offer or invitation does not exceed the limit as specified in clause (c) of sub section (1) of section 180 and in such cases relevant Board resolution under clause (c) of subsection (3) of section 179 would be adequate:
Provided also that in case of offer or invitation for non-convertible debentures, where the proposed amount to be raised through such offer or invitation exceeds the limit as specified in clause (c) of sub-section (1) of section 180, it shall be sufficient if the company passes a previous special resolution only once in a year for all the offers or invitations for such debentures during the year.
Valuation Report from the registered valuer is required for issue of securities and name and address of the valuer shall be mentioned in the explanatory statement.
A private placement offer cum application letter shall be in Form PAS-4 serially numbered and addressed specifically to the person to whom the offer is made and shall be sent to him, either in writing or in electronic mode, within thirty days of recording the name of such person.
– A company shall issue private placement offer cum application letter only after the relevant special resolution or Board resolution has been filed in the Registrar.
– The company shall maintain a complete record of private placement offers in Form PAS-5.
Every identified person willing to subscribe to the private placement issue shall apply in the private placement and make the payment of subscription money either by cheque or demand draft or other banking channel and but not in cash.
Payment to be made for subscription to securities shall be made from the bank account of the person subscribing to such securities.
A company making an offer or invitation under this section shall allot its securities within sixty days from the date of receipt of the application money for such securities and if the company is not able to allot the securities within that period, it shall repay the application money to the subscribers within fifteen days from the expiry of sixty days and if the company fails to repay the application money within the aforesaid period, it shall be liable to repay that money with interest at the rate of 12% per annum from the expiry of the sixtieth day.
Filing Of Return
A company making any allotment of securities under this section, shall file with the Registrar a return of allotment in PAS-3 within fifteen days from the date of the allotment along with a complete list of all allottees containing following details:
(i) the full name, address, permanent Account Number and E-mail ID of such security holder;
(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.