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

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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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Judgement posted by

FCS Deepak Pratap Singh

Associate Vice President - Secretarial & Compliance (SBI General Insurance Co. Ltd.)

Dear Friends, MyselfFCSDeepak P. Singh ( B.Sc.. LLB, FCS. FIII, CIAFP, CRMP, ID) , A Fellow Member of ICSI, Law Graduate ,Fellow Member of Insurance Institute of India, Certified Independent Director ,Certified Insurance Anti Fraud Professional , Certified Risk Governance Professional ( ICSI-III) and cleared Limited I ... Read more

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