While Undertaking Private Placement under Section 42 of the Companies Act, 2013, following points should be kept in mind:-

1. To ensure that persons to whom offer has been made does not exceed 200 in a financial year for each kind of security.

2. It is to be noted that any offer or invitation made to qualified institutional buyers or to employees of the company under scheme of employees stock option shall not be considered while calculating the limit of two hundred persons.

3. No allotment against an previous offer / invitation of any kind of security is pending

4. Company has passed special resolution for each offer/ invitation (except in case of NCDs, where one resolution in a year for all offers during the year is sufficient)

5. Explanatory statement contains justification for price and premium, if any

6. Issue of a private placement offer letter is made in form PAS-4

7. Private placement was offered to such persons whose names are recorded prior to the invitation to subscriber.

8. The Company has maintained record of offer letters in form no. PAS-5.

Private Placement under Companies Act, 2013 – Things to keep in Mind

9. Company has filed offer letter with ROC in form no. PAS-4 simultaneously alongwith circulation of offer letter but before opening of offer period.

10. Amount against offer to be received only by cheque / demand draft / other banking channels but not by cash – only from the bank account of the proposed allottee in a seperate bank account maintained for the said purpose

11. Allotment is completed within 60 days from date of receipt of application form. If not, application money repaid within 15 days of completion of 60 days. If not repaid, the application money along with interest at 12 percent per annum from expiry of 60th day was paid.

12. Board resolution to specifically contain authority for issuance of share certificates by a directors and CS / one authorized person.

13. Share application money to be kept in separate bank account and to be utilized only for (a) adjustment against allotment or (b) repayment

14. Company filed Return of allotment in form PAS-3 within 30 days

15. Share certificates were issued within 2 months of allotment of shares / 6 months of allotment of debentures

16. Company has made entry in Register of Members

17. The funds received against allotment of shares to be utilised only after filing of PAS-3

18. To ensure that stamp duty has been paid according to the provisions of Stamp Act of the respective state.

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