Quick Summary
Private Placement is the process by which a company issues shares or securities to a select group of investors rather than offering them to the general public.
Private Placement is governed by Section 42 of the Companies Act, 2013. It allows companies to raise capital by issuing securities to a select group of identified persons without making a public offer.
Key Requirements
- Maximum 200 investors in a financial year (excluding QIBs and employees)
- Private Placement Offer Letter in Form PAS-4
- Board Resolution and Special Resolution (if required)
- File PAS-3 within 15 days of allotment
- Maintain complete record in Form PAS-5
Process
- Identify potential investors
- Pass Board Resolution
- Issue Private Placement Offer Letter (PAS-4)
- Receive application money in separate bank account
- Hold General Meeting (if needed)
- Allot shares and issue share certificates
- File PAS-3 with ROC
Restrictions
- Cannot advertise to public
- Cannot make a general solicitation
- Only identified persons can apply
- Minimum investment ₹20,000 per person
Key Points
- Issue to select investors only
- Max 200 investors per year
- No public advertisement allowed
- File PAS-3 within 15 days
- Offer letter in Form PAS-4