Sunday, July 1, 2018
Private Placement of Shares
Private Placement of Shares
Private Placement means any offer of securities or invitation to subscribe securities to a select group of persons by a company other than by way of public offer through issue of a private placement offer letter and which satisfies the conditions specified in Section 42;
Maximum Number of Persons to whom offer can be made and other incidental maters;
Private Placement shall be made to such number of persons not exceeding two hundred persons (200) in the aggregate in a financial year. Important to note that any offer or invitation made to Qualified institutional buyers, or to employees of the company under the scheme of employees stock option shall not be considered while calculating the limit of two hundred persons.
Value of such offer or invitation per person shall be with an investment size of not less than twenty thousand rupees of face value of the securities
Payment to be made for subscription to securities shall be made from the bank account of the person subscribing to such securities and the company shall keep the record of the Bank Account from where such payments for subscriptions have been received.
Private Placement to be approved in Special Resolution
The Company shall not make a private placement of its securities unless;
The proposed offer of securities or invitation to subscribe securities have been previously approved by shareholders of the company, by special Resolution for each offers or invitations.
In the explanatory statement annexed to the notice for the General Meeting the basis or justification for the price (including premium, if any) at which the offer or invitation is being made shall be disclosed.
Mode of payment of subscription Money
Through Cheque or demand draft or other banking channels but not by cash
Time Limit for Allotment and payment of interest/ refund of subscription money otherwise
A Company making an offer or invitation shall allot its securities within sixty days from the date of receipt of the application money for such securities and if the company is not able to allot the securities within that period, it shall repay the application money to the subscribers within 15 days from the date of completion of sixty days and if the company fails to repay the application money within aforesaid period, it shall be liable to repay that money with interest at the rate of twelve percent per annum from the expiry of the sixtieth day
Subscription money to be kept in seperate Bank Account (Scheduled Bank)
The money shall not be utilised for any other purpose other than;
- for adjustment against allotment of securities
- for repayment of monies where the company is unable to allot securities
Offer to be made specifically addressing persons
Private Placement shall be made only to such persons whose names are recorded by the company prior to invitation to subscribe, and that such person shall receive the offer by name and that a complete record of such offers shall be kept by the company
Important points to be kept in mind;
- Offer letter in Form PAS 4
- Offer shall not be made to more than 200 persons excluding QIBs and employees
- Monies payable shall not be in cash
- monies shall be in scheduled bank kept separately
- allotment within 60 days of monies received
- Offer only to be made to those whose names are recorded by the company
- Record shall be in Form PAS
- Copy of Record shall be filed with ROC along with Form PAS 4 within 30 days
- Within 30 days of circulation of private placement offer letter inform registrar
- The company shall not use public advertisement, any media marketing or any agents
- Return of allotment of securities under Section 42 in Form PAS 3 to be filed with ROC within 30 days
Compliances with the Registrar;
Compliances with the Registrar;
Procedure for Private Placement
1. Check provisions in Article of Association Of Company.
2. Call Board Meeting:
� Prepare Offer Letter
� Make Proposal for Private Placement
� Prepare list of persons to whom option will be given
� Call EGM
3. In EGM:
� Pass SR (will be valid for 12 months)
� If not completed Private Placement in 12 Months pass another SR
� Approve Draft Offer Letter by SR
4. File MGT-14 with ROC (Notice of EGM, CTC of SR Minutes will be attached with it)
5. Issue offer letter in PAS-4 within 30 days of record of name of persons:
� Application form serially numbered
� Address to the persons to whom the offer is made
6. Prepare complete record of Private Placement in PAS-5.
7. File PAS-4 + PAS-5 with ROC within 30 days of issue of offer letter in GNL-2
8. Make Allotment of shares within 60 days of receipt of Money from the persons to whom right was given.
9. Called BM for allotment of shares
10. File PAS-3 with Roc within 30 days if Allotment. (List of Allottees, BR for allotment of share will be attached)
11. File Form MGT-14 along with Resolution pass in Board meeting for allotment of shares.
12. Issue Share Certificates.
For more details, Contact CS Neha Seth at csnehaseth@gmail.com or call us at +919871903449
