Private placement

Others 661 views 2 replies

Amit Kumar Verma

CA Final CS Professional

501 Points Posted on 16 November 2012

Hi frnds.. Can any1 plz explain the meaning & difference betwn Private Placement & Preferrential Allotment. Plz tell whthr the following is a case of private placement: A private limited company had 5 members at d tym of incorporation who r either directors or relatives of directors. After 5 months it allots further equity shares to 8 persons out of which 5 are above said existing members and 3 are new members who are also relatives of directors. Thanks

Replies (2)

CA Mansi Kotadia

Chartered Accountant

525 Points Posted on 16 November 2012

A private placement is an issue of shares or of convertible securities by

a company to a select group of persons under Section 81 of the

Companies Act, 1956 which is neither a rights issue nor a public issue. (Generally made by Pvt Ltd Co) This is a faster way for a company to raise equity capital.

A listed company going for preferential allotment are has to comply with the

requirements contained in Chapter XIII of SEBI (DIP) Guidelines

pertaining to preferential allotment in SEBI (DIP) guidelines which inter alia include pricing, disclosures in notice etc, in addition to the requirements specified in the Companies Act.

A Qualified Institutions Placement is a private placement of equity

shares or securities convertible in to equity shares by a listed company to

Qualified Institutions Buyers only in terms of provisions of Chapter XIIIA

of SEBI (DIP) guidelines.

Now according to your query a Private Ltd comapny always being Unlisted it always makes Private Placement. to Explain it further it's a Issue of Stock available only to Designated Buyers so that the confidentiality of matters and personal holding of shares by the own members always so seeked by pvt ltd is maintained.

ravindra kumar

director

25 Points Posted on 20 November 2012

what will be fallout of the order made by Supreme Court in case of SEBI Vs Sahara as ROC have been issuing the Notices to Unlisted Companies who have issued to Public Exceeding 50 in numbers Shares or Debenturs?

Ravindra

Patna