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A summary of provisions of Companies Act, 2013 for Private Placement read with Rules issued thereunder

1. The preferential offer shall be made in accordance with the provisions of the Act (Sec 42 & 62) and rules made thereunder (Chapter-3 Rule 14 & Chapter-4 Rule 13) , namely:-

(a) The issue is authorized by AOA;

(b) Offer or invitation shall be made to not more than 200 persons in the aggregate in a financial year.

(c) The value of such offer or invitation per person shall be with an investment size of not less than Rs.20,000 of face value of the securities.

(d) The securities allotted by way of preferential offer shall be made fully paid up at the time of their allotment.

(e) Should be approved by the shareholders of the company, by a Special Resolution, for each of the Offers or Invitations

(f) The company shall make the disclosures, as prescribed in Chapter-4 Rule 13, in the explanatory statement to be annexed to the notice of the general meeting pursuant to section 102 of the Act.

(g) The allotment shall be completed within a period of 12 months from the date of passing of the special resolution. If not allotted within 12 months, another special resolution shall be passed for the company to      complete such allotment thereafter.

(h) The price of the shares or other securities to be issued on a preferential basis, either for cash or for consideration other than cash, shall be determined on the basis of valuation report of a registered valuer.

2. Issue offer letter in PAS – 4 and file with ROC in Form GNL-2.

3. Offer letter shall be accompanied by an application addressed specifically to such persons whose names are recorded by the company prior to the invitation to subscribe and within 30 days of recording the names of such persons.

4. Maintain a complete record of private placement offers in Form PAS-5 and file with ROC within 30 days from the date of offer letter.

5. Monies received on application under this section shall be kept in a separate bank account.

6. Allot within 60 days from the date of receipt of share application money and allot only to persons whose names are recorded prior to intimation to subscribe.

7. A return of allotment of securities u/s 42 shall be filed with ROC within 30 days of allotment in Form PAS-3 along with a complete list of all security holders containing-

(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.


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