Scribd
Upload
46 views2 pages

Private Placement

The document outlines the procedure and provisions for private placement of securities by a company. It lists 8 steps in the procedure including obtaining board and shareholder approval, issuing an offer letter, allotting securities within 60 days, and filing required forms. It also lists penalty provisions for non-compliance.

Uploaded by

itsrahulmaheshwari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
46 views2 pages

Private Placement

The document outlines the procedure and provisions for private placement of securities by a company. It lists 8 steps in the procedure including obtaining board and shareholder approval, issuing an offer letter, allotting securities within 60 days, and filing required forms. It also lists penalty provisions for non-compliance.

Uploaded by

itsrahulmaheshwari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Private Placement

Sr. Procedure Provisions


No.
1. Board Resolution: Conduct a Board Meeting and pass Section 179(3)(c), Rule 14(8)
Board Resolution to approve list of identified person,
draft offer letter for offer and issue of securities through
private placement.

2. Shareholders’ Approval: Issue Notice with Explanatory Section 179(3)(c), Rule 14(8),
Statement and conduct EGM or AGM and pass Special Rule 14(1)
Resolution to take approval of shareholder to approve
offer letter and issue securities on private placement Form: MGT-14
basis and then file Form MGT-14 with Registrar of
Companies within 30 days of date of General Meeting.

3. Circulate PAS-4 (Letter of offer) to the person to whom Rule 14(3)


the offer is made. It shall be sent either in writing or in
electronic mode, within thirty days of recording the Form: PAS-4
name of such person.

4. Company shall maintain a complete record of private Rule 14(4)


placement offers in Form PAS-5.
Form: PAS-5
5. Company shall allot its security within 60 days from the Section 42(6)
date of receipt of the application money, if not, then it
shall repay within 15 days.

6. Opening of separate bank account in a scheduled bank Section 42(6) proviso.


where monies received on application shall be kept.

7. File return of allotment in the Form PAS-3 with Section 42(9), Rule 14(6)
Registrar of Companies within 15 days of allotment,
along with all the details of the allotee. Form: PAS-3

Within 30 days after allotment of security (As per Rule


12(1))
8. Issue share certificates in Form SH-1, within 2 months Section 56(4)(b)
from date of allotment.
Rule 5(2) of SC&D Rules.

Form : SH-1

Penalty Provisions:
1. In case the Co. fails to allot securities and fails to repay the money back to the allotees within 15
days from the expiry of 60 days, it shall be liable to repay that money with interest at 12% p.a
from the expiry of the 16th day. (Section 42(6))

2. If the Co. defaults in filing return of allotment (PAS 3) within prescribed period, the directors and
promoters shall be liable for Rs. 1000 daily since day of default to a maximum amount of 25
Lakhs. (Section 42(9))
3. If Co. makes allotment while contravening the provisions of this Act or Rules, the directors and
promoters shall be liable for up to 2 Crores or amount of allotment, whichever is lower. (Section
42(10))

You might also like