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[14 Private placement.

(1) For the purposes of sub-section (2) and sub-section (3) of section 42 a company shall no
t make an offer or invitation. to subscribe to securities through private placement unless the pr
oposal has been previously approved by the shareholders of the company, by a special resolu
tion. for each of the offers or invitations:

Provided that in the explanatory statement annexed to the notice for shareholders' approval, t
he following disclosure shall be made:-

(a) particulars of the offer including date of passing of Board resolution;

(b) kinds of securities offered and the price at which security is being offered:

(c) basis or justification for the price (including premium, if any) at which the offer or invitatio
n is being made;

(d) name and address of valuer who performed valuation;

(e) amount which the company intends to raise by way of such securities;

(f) material terms of raising such securities, proposed time schedule, purposes or objects of o
ffer, contribution being made by the promoters or directors either as part of the offer or separa
tely in furtherance of objects; principle terms of assets charged as securities:

Provided further that this sub-rule shall not apply in case of offer or invitation for. non-converti
ble debentures, where the proposed amount to be raised through such offer or invitation does
not exceed the limit as specified in clause (c) of sub section (1) of section 180 and in such cos
es relevant Board resolution under clause (c) of subsection (3) of section 179 would be adequ
ate:

Provided also that in case of offer or invitation for non-convertible debentures, where the prop
osed amount to be raised through such offer or invitation exceeds the limit as specified in clau
se (c) of sub-section (1) of section 180, it shall be sufficient if the company passes a previous s
pecial resolution only once in a year for all the offers or invitations for such debentures during t
he year.

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[Provided also that in case of offer or invitation of any securities to qualified institutional buy
ers, it shall be sufficient if the company passes a previous special resolution only in a year for a
II the allotments to such buyers during the year.]
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Provided also that no offer or invitation of any securities under this rule shall be made to ab
ody corporate incorporated in, or a national of, a country which shares a land border with lndi
a, unless such body corporate or the national, as the case may be, have obtained Government
approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and at
tached the same with the private placement offer cum application letter.

(2) For the purpose of sub-section (2) of section 42, an offer or invitation to subscribe securiti
es under private placement shall not be made to persons more than two hundred in the aggre
gate in a financial year:

Provided that any offer or invitation made to qualified institutional buyers, or to employees oft
he company under a scheme of employees stock option as per provisions of clause (b) of su
b-section (1) of section 62 shall not be considered while calculating the limit of two hundred p
ersons.

Explanation.- For the purposes of this sub-rule it is hereby clarified that the restrictions afores
aid would be reckoned individually for each kind of security that is equity share, preference sh
are or debenture.

(3) A private placement offer cum application letter shall be in the form of an application in
l&.1[ Form PAS-4] serially numbered and addressed specifically to the person to whom the offe
r is made and shall be sent to him, either in writing or in electronic mode, within thirty days of r
ecording the name of such person pursuant to sub-section (3) of section 42:

Provided that no person other than the person so addressed i. the private placement offer cu
m application letter shall be allowed to apply through such application form. and any applica
tion not conforming to this condition shall be treated as invalid

(4) The company shall maintain a complete record of private placement offers in
Form PAS-5.

(5) The payment to be made for subscription to bank account of the person subscribing to su
ch keep the record of the bank account from where been received:

Provided that monies payable on subscription to securities to be held by joint holders shall be
paid from the bank account of the person whose name appears first in the application:

Provided further that the provisions of this sub-rule shall not apply in case of issue of shares f
or consideration other than cash.

(6) A return of allotment of securities under section 42 shall be filed with the Registrar within f
ifteen days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registr
ation offices and .E.e..e..s) Rules, 2014 along with a complete list of all the allottees containing-
 (i) the full name, address, permanent Account Number and E-mail ID of such security holder;

(ii) the class of security held;

(iii) the date of allotment of security;

(iv) the number of securities herd, nominal value and amount paid on such securities; and pa
rticulars of consideration received if tire securities were issued for consideration other than cos
h.

(7) The provisions of sub-rule (2) shall not be applicable to -

(a) non-banking financial companies which are registered with the Reserve Bank of India und
er the Reserve Bank of India Act,1934 (2of1934) and

(b) housing finance companies which are registered with the National Housing Bank under th
e National Housing Bank Act, 1987 (53of1987),

if they are complying with regulations made by the Reserve Bank of India or the National Haus
ing Bank in respect of offer or invitation to be issued on private placement basis:

Provided that such companies shall comply with sub-rule (2) in case the Reserve Bank of lndi
a or the National Housing Bank have not specified similar regulations.

(8) A company shall issue private placement offer cum application letter only after the releva
nt special resolution or Board resolution has been filed in the Registry:

Provided that private companies shall file with the Registry copy of the Board resolution or spe
cial resolution with respect to approval under clause (c) of subsection (3) of section 179 ]

Amendment

l.

Substituted by the companies (prospectus and Allotment of Securities) Second Amendment

2.

Inserted by the Companies (Prospectus and Allotment of Securities) Amendment Rules 2020
Dated 16th October 2020

3.

Inserted fifth proviso to rule 14 sub-rule 1 by The Companies (Prospectus and Allotment of Sec
urities) Amendment Rules 2022
 4.

Subsituted by The Companies (Prospectus and Allotment of Securities) Amendment Rules 20

Original Omitted Content:-14 Private Placement

(1) (a) For the purposes of sub-section (1) of section 42. a company may make an offer or invit
ation to subscribe to securities through issue of a private placement offer letter in Form PAS-4.

(b) A private placement offer letter shall be accompanied by an application form serially num
bered and addressed specifically to the person to whom the offer is made and shall be sent to
him, either in writing or in electronic mode, within thirty days of recording the names of such p
ersons in accordance with sub-section (7) of section 42:

Provided that no person other than the person so addressed in the application form shall be al
lowed to apply through such application form and any application not conforming to this con
dition shall be treated as invalid.

(2) A company shall not make a private placement of its securities unless -

(a) the proposed offer of securities or invitation to subscribe securities has been previously ap
proved by the shareholders of the company, by a Special Resolution, for each of the Offers or I
nvitations:

Provided that 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 b
eing made shall be disclosed:

Provided further that in case of offer or invitation for non-convertible debentures, it shall be suf
ficient if the company passes a previous special resolution only once in a year for all the offers
or invitation for such debentures during the year.

l [Provided also that in case of an offer or invitation for non-convertible debentures referred to
in the second proviso, made within a period of six months from the date of commencement of
these rules, the special resolution referred to in the second proviso may be passed within the s
aid period of six months from the date of commencement of these rules.]

(b) such offer or invitation shall be made to not more than two hundred persons in the aggreg
ate in a financial year:

Provided that any offer or invitation made to qualified institutional buyers, or to employees oft
he company under a scheme of employees stock option as per provisions of clause (b) of su
b-section (1) of section 62 shall not be considered while calculating the limit of two hundred p
ersons;
Explanation.- For the purposes of this sub-rule, it is hereby clarified that -

(i) the restrictions under sub-clause (b) would be reckoned individually for each kind of securit
y that is equity share, preference share or debenture;

(ii) the requirement of provisions of sub-section (3) of section 42 shall apply in respect of offer
or invitation of each kind of security and no offer or invitation of another kind of security shall b
e made unless allotments with respect to offer or invitation made earlier in respect of any othe
r kind of security is completed;

(c) the value of such offer or invitation per person shall be with an investment size of not less t
hon twenty thousand rupees of face value of the securities;

(d) the payment to be made for subscription to securities shall be made from the bank accou
nt of the person subscribing to such securities and the company shall keep the record of the B
ank account from where such payments for subscriptions have been received:

Provided that monies payable on subscription to securities to be held by joint holders shall be
paid from the bank account of the person whose name appears first in the application.

(3) The company shall maintain a complete record of private placement offers in Form PAS-5:

Provided that a copy of such record along with the private placement offer letter in Form PA
S-4 shall be filed with the Registrar with fee as provided in Companies (Registration Offices an
d Fees) Rules, 2014 and where the company is listed, with the Securities and Exchange Board wi
thin a period of thirty days of circulation of the private placement offer letter.

Explanation.- For the purpose of this rule, it is hereby clarified that the date of private placeme
nt offer letter shall be deemed to be the date of circulation of private placement offer letter.

(4) A return of allotment of securities under section 42 shall be filed with the Registrar within thi
rty days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registratio
n Offices and Fees) Rules, 2014 along with a complete list of all security holders containing-

(i) the full name, address, Permanent Account Number and E-mail ID of such security holder;

(ii) the class of security held;

(iii) the date of allotment of security;

(iv) the number of securities held, nominal value and amount paid on such securities; and par
ticulars of consideration received if the securities were issued for consideration other than cos
h.

(5) The provisions of clauses (b) and (c) of sub-rule (2) shall not be applicable to -
(a) non-banking financial companies which are registered with the Reserve Bank of India und
er Reserve Bank of India Act, 1934; and

(b) housing finance companies which are registered with the National Housing Bank under Nat
ional Housing Bank Act, 1987,

if they are complying with regulations made by Reserve Bank of India or National Housing Bank
in respect of offer or invitation to be issued on private placement basis:

Provided that such companies shall comply with sub-clauses (b) and (c) of sub-rule (2) in ca
se the Reserve Bank of India or the National Housing Bank have not specified similar regulation
s.

Amendment

L Inserted by Notification No. 424(E) Companies (Prospectus and Allotment of Securities) Ame
ndment Rules, 2014 Dated 30th June, 2014.