Private Placement Under the Companies Act 2013,
Sec 42: Offer or invitation for subscription of securities on private placement:
- The private placement offer letter or invitation can not be issued to more than 50 people or such higher number as may be prescribed in one financial year.
o Exemption: Qualified Institutional Buyers and Employees of the company (ESOP)
Note: The offer shall be made to only such persons whose names are recorded by the company prior to the invitation to subscribe.
No offer shall be made to the public through any media, advertisement, or through any distribution channels.
The complete information of the offer shall be filed with the Registrar within 30 days from the date of circulation of the respective private placement offer letter.
- No fresh offer letter can be issued until the process of the earlier issue is completed.
- In case of any non – compliance of the law then the same shall be treated as public offer and all the criteria and laws applicable to a public offer shall be attracted.
- The subscription money can be collected only through cheque, DD or through any other banking channel BUT NOT BY CASH.
- Allotment shall be made within 60 days from the date of receipt of the money and return of allotment shall be filed with the ROC within 30 days of allotment.
- In case of non-allotment of securities then the money received on application shall be refunded within 15 days and in case of any delay in refunding within the said period then 12% interest shall be payable.