Mr. Pranay Patel is the proprietor of the firm having vast knowledge of corporate laws and Compliance management. He is a fellow member of the Institute of Company Secretaries of India (ICSI) and post graduate in commerce. He is having an overall experience of 13 years and he is in whole time practice since 2012. He has held the position of Chairman of the Bhopal chapter in the year 2020 and currently active in chapter activities and regularly takes sessions for various training programs of students of ICSI.

Office Address

62-B, 2nd Floor, Opp. Jain Mandir, Near Chetak Bridge Bhopal -462023 (M.P), India

Phone Number

+917869020174

Email Address

cspranaypatel@gmail.com

PRIVATE PLACEMENT

List of Sections and Rules Applicable to Private Placement of Equity Shares

(In case of private limited companies issuing equity shares)

  • Section 42 of the Companies Act, 2013.
  • Section 62(1)(c) of the Companies Act, 2013.
  • Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.
  • Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014.

Step by Step Procedure for Private Placement:

S. No.

Action Required

Particulars

Remarks

1

Hold Board Meeting
  • To approve the issue of securities through private placement.
  • To approve the list of identified persons.
  • To approve the draft offer letter.
  • To fix, day, date, time & venue of for holding General Meeting along with approval of draft notice of General Meeting.

 

2

Filing of form MGT-14
  • To file form MGT-14 with ROC within 30 days of passing of board resolution.

Rule 14(8) of Companies (Prospectus and Allotment of Securities) Rules, 2014.

 

3

Hold General Meeting
  • To pass special resolution approving PP and approving offer letter.

Section 62(3) read with Rule 14(1) of Companies (Prospectus and Allotment of Securities) Rules, 2014.

4

Filing of form MGT-14
  • File the Special Resolution in Form MGT-14 within 30 days from the date of EGM.

Section 117(1) & (3)

5

Circulate the Offer Letter (PAS-4)
  • PAS-4 to be circulated to the identified persons within 30 days of recording the name of such person pursuant to section 42(3).
  • It can be circulated only after filing MGT-14.

Rule 14(3) & Rule 14(8) of Companies (Prospectus and Allotment of Securities) Rules, 2014.

6

Receive the Application money
  • Company shall receive the amount of subscription through cheque or demand draft or other banking channels from the Bank Account of the person subscribing to securities except in case of issue of securities for consideration other than cash.

 

  • The Application money to be received and kept in a Separate Bank Account.

Section 42(4)

 

 

 

 

 

 

 

Proviso to Section 42(6)

7

Filing of form PAS-3
  • The Return of Allotment in Form PAS-3 to be filed within 15 days from the date of allotment.

Section 42(8) & Rule 14(6) of Companies (Prospectus & Allotment of Securities) Rules, 2014

8

Other incidental matters
  • Issue of Share Certificates within 2 months from the date of allotment.
  • Updating the Register of Members.

Section 56(4)(b)

Some important points to remember

1. The issue must be authorized by the articles of association of the company. Rule 13(2)(a) of Companies (Share Capital & Debentures) Rules, 2014

2. Valuation of shares from Registered Valuer is required. Section 61(1)(c) read with Rule 13(2)(g) & Rule 13(3) of Companies (Share Capital & Debentures) Rules, 2014

3. Private Placement offer can be made to a maximum of 50 persons at a time and not exceeding 200 persons in the aggregate in a financial year. Section 42(2) read with rule 14(2) of Companies (Prospectus & Allotment of Securities) Rules, 2014

4. Company shall not utilize monies raised through private placement unless allotment is made and the return of allotment is filed with the Registrar. Proviso to Section 42(4)

5. No fresh offer or invitation shall be made unless the allotments with respect to any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or abandoned by the company. Section 42(5)

6. Allotment to be done within 60 days from the date of receipt of Application Money, if not then company shall repay the money within 15 days from the expiry of 60 days, if the company fails to repay money within this period then money shall be repaid with interest of 12% p.a. from the expiry of 60th day. Section 42(6)

7. No company issuing securities under section 42 shall release any public advertisements or utilize any media, marketing or distribution channels or agents to inform public at large about such an issue. Section 42(7)

8. The company shall maintain a complete record of private placement offers in Form PAS-5. Rule 14(4) of Companies (Prospectus & Allotment of Securities) Rules, 2014

9. The subscription amount should be received from the bank account of the person subscribing to such securities and company shall keep the record of the bank account from where such payment for subscription is received. Rule 14(5) of Companies (Prospectus & Allotment of Securities) Rules, 2014

Disclaimer

This write up is prepared for knowledge sharing purpose. Please read the provisions carefully before making any conclusion.

Prepared by

Pranay Patel & Associates Company Secretaries, Bhopal (MP)

Contact Details

Contact: 7869020174

Email: cspranaypatel01@gmail.com