Once allotment is made to less than fifty allottees by way of private allotment the first proviso to Section 67(3) clearly makes it a private issue and not a public issue

Last updated: 31 March 2023
Quick Summary
The Securities Appellate Tribunal ruled that if a company allots shares privately to fewer than fifty individuals, it is considered a private issue, not a public one, according to the first proviso of Section 67(3) of the Companies Act. This decision overturned SEBI's finding of a violation, as the company had indeed made private placements to less than fifty allottees, thus not contravening the Act.

Court :
Securities Appelate Tribunal

Brief :
The appeal is allowed on the finding that no evidence has come forward to show that the company had made a public offer other than these 49 persons. Once allotment is made to less than fifty allottees by way of private allotment the first proviso to Section 67(3) clearly makes it a private issue and not a public issue.

Citation :
ZENITH HIGHRISE INFRACON LTD., MR. KATYAL BANERJEE (APPELLANT) VS. SEBI (RESPONDENT)

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