CS Payal Dongre
Private Placement under Companies Act 2013, means any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through private placement offer cum application which satisfies the following conditions:-
1. The offer of securities or invitation to subscribe securities, shall be made to such number of persons not exceeding fifty or such higher number as may be prescribed, excluding Qualified Institutional Buyers, and Employees of the company being offered securities under a scheme of ESOS in a financial year and on such conditions (Including the form and manner of private placement) as may be prescribed.
(If a company listed or unlisted, makes an offer to more than fifty members then it shall be deemed to be public offer and all the provisions related to public offer under Companies Act,2013, Securities Contracts(Regulation)Act,1956 and the Securities Exchange Board of India Act,1992 shall be applicable.)
2. No fresh offer or invitation is to be made until and unless the allotment in respect to the offer is being completed, withdrawn or abandoned by the company.
3. All monies received on application under private placement shall be by way of Cheque or demand draft or other banking channels but not by cash.
4. Allotment of securities shall be made within 60 days from the date of the receipt of the application money. If allotment is not being made, application money is to be refunded within 15 days from the closure of the 60 days. If the company is unable to pay the application money within 15 days then it is liable to pay interest at the rate of 12% p.a. from the 16th
5. All the monies received on application under this offer shall be kept under a separate bank account in a scheduled bank and the money shall be used for the adjustment against the allotment of securities or for the repayment of monies where the company is unable to allot its securities.
6. All the details of the persons to whom the offer is being made, is to be recorded by the company prior to the invitation to subscribe and shall be filed to the registrar within 30days of circulation of relevant private placement offer letter.
7. No company offering securities through private placement shall make public advertisements or utilize any media, marketing or distribution channels or agents to inform public at a large about such an offer.
8. Whenever company makes allotment of securities it needs to file return of allotment in E-Form PAS-3 including the complete list of all security holders, with their full names, addresses, number of securities and such other information.
9. Any contravention can attract a penalty equal to the amount involved in the offer or Rs. 2 Crores which is lower on promoters and directors. Further company shall repay all monies to subscribers within 30 days of the order imposing the penalty.