CS Divesh Goyal

Section (1)(c) read with Sec-42 of Companies Act 2013

1. Check Provision in Article regarding Private Placement

2. Call Board Meeting:
• To Prepare Offer Letter
• Make Proposal for Private Placement
• Prepare list of persons to whom option will be given
• Call EGM

3. Call EGM:
• Pass SR- will be valid for 12 month
• If not completed PP in 12 Month pass another SR
• Approve Draft Offer Letter by SR

4. File MGT-14 with ROC
– Notice of EGM
– CTC of SR
– Minutes

5. Issue offer letter in PAS-4 within 30 days of record of name of persons:
• Application form serially numbered
• Address to the persons to whom the offer is made

6. Prepare complete record of Private Placement in PAS-5

7. File PAS-4 + PAS-5 with ROC within 30 days of issue of offer letter in GNL-2

8. Make Allotment of shares within 60 days of receipt of Money from the persons to whom right was given.

9. Called BM for allotment of shares

10. File PAS-3 with Roc within 30 days if Allotment.
– List of Allottees
– BR for allotment of share

11. File Form MGT-14 along with Resolution pass in Board meeting for allotment of shares.

12. Issue Share Certificates.


o An offer can be made under a Private Placement Offer Letter to not more than 200 people. Not just the limitation of allotment to 200 people but even an invitation to subscribe cannot be made to more than 200 people. The 200 people limit excludes Qualified Institutional Buyers and Employees and the limit of 200 people is calculated individually for each kind of security. Obviously, there cannot be a public announcement of such offers.

• The application form has to be numbered and addressed specifically to the person to whom the offer is made along with the Offer Letter. Allotments can be made only to such persons

• The value of the Offer per person shall not be less than INR 20,000 of ‘face value’ of securities. The payment for subscription should be through the bank account of the person subscribing to the securities and the company should keep a record of the bank account from where such payments have been received. No cash transaction is permitted. The money so received shall be kept in a separate bank account of the company and utilised only for allotment (or repayment).

• The price of the security has to be justified and the inference is that, it requires a valuation report by a Registered Valuer (can be a company secretary, chartered accountant or a cost accountant)

• Non-compliance can lead to a penalty of INR 2 crores or the amount involved in the offer, whichever is higher.

(Author can be reached at csdiveshgoyal@gmail.com )

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  1. surbhi khandelwal says:

    Hello Divesh , I read your article it is very informative.. Can you please tell me is there is change in 2018 to till date as you written this article in 2014?

  2. brajesh kumar says:

    With due respect, I dont think the 11th step is correct. MGT 14 is not to be filed for allotment of shares. It is to be filed only in the first step i.e. the issue of shares.

  3. pawan says:

    Dear Sir
    your article is very informative and concise containing all provisions in a sequence. I just want to clarify whether can GNL 2 be filied after PAS 3 if delayed by mistake, if yes, is there any other consequences except additional fee.

  4. Radharamanan Panicker says:

    Will offer of placement to employees of a private limited company come under the provision of this referred section (1)(c) read with Sec-42 of Companies Act 2013

  5. SHRUTI says:

    “The value of the Offer per person shall not be less than INR 20,000 of ‘face value’ of securities. ”
    Is is amended…?
    I read somewhere that it is INR 50,000

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