BY PRIVATE & LISTED & UNLISTED PUBLIC COMPANIES
Chapter III
Part II – Private Placement
Section 42 (Sub Section 1 - 10)
ISSUE OF SECURITIES BY
Public Companies
Public Offer
Private Companies
--
Through private placement by complying with provisions of Part II
Right / Bonus Issue
Provisions of Part II will apply to listed / unlisted public
companies only if the offer is made to persons not exceeding 50
or such number as may be prescribed (Present number is
200)otherwise it will treated as Public offer provisions of Part I
will apply
"Private Placement" means any offer of securities or invitation
to subscribe securities to a select group of persons by a
company (other than by way of public offer) through issue of a
private placement offer letter and which satisfies the
conditions specified in this section.
To whom Private Placement can be made
Issue /Offer to Select group of persons through
Private Placement Offer Letter (PAS 4)
Not exceeding 50 or such higher number as may be
prescribed ( Present limit is 200 )
Exception • Any offer made to QIB or ESOP shall not be considered
while calculating limit of 200

Value of such offer or invitation per person shall be with an investment size of not
less than Rs 20,000/- of face value of the securities

First, record the name of persons to whom the private placement is to be made

Then take Previous Approval of shareholders by passing Special Resolution

Then send --Private Placement Offer Letter -PAS-4 – to be sent to persons whose
names are recorded, accompanied by application form either in writing or in
electronic mode
if not made to the person addressed and any application not conforming to
provisions shall be treated as invalid

Offer shall not be made to more than 200 persons in aggregate in a financial year
Exception - Any offer made to QIB or ESOP shall not be considered while
calculating limit of 200

Maintain a complete record of private placement offers in Form PAS-5

Payment of Subscription money –


Subscription money to be paid Only by Cheque /Demand Draft /other
Banking Channel but NOT BY CASH AND it should be from the account of
the person who subscribe to securities

Company should keep it in separate bank account with Schedule Bank
Compulsion of Allotment
 Allot Securities within 60 days of receipt of application money,
 if not allotted within 60 days pay back it within 15 days
 If fails to pay back – pay int. @ 12% p.a. from 60th day


Subscription Money can be utilized only for
 Adjustment against allotment of Securities
 Repayment of monies where company is unable to allot
securities.
Restriction on Making Private Placement
 If any offer or invitation made earlier have not been
completed or that offer or invitation has not been
withdrawn or not abandoned by the company - - then
can not make fresh offer/invitation

No Advertisement / No use of media / marketing or
distribution channel/agent to inform public
Filing of Forms
Form No
PAS-3
PAS-4
(To be filed
in GNL-2
Form)
PAS-5
(To be filed
in GNL-2
Form)
Purpose of Form
Return of
Allotment
Time Limit
Within 30
days of
allotment
Private Placement 30 days from
Offer Letter
Circulation of
PPOL
Complete record
of private
placement offers
To be filed
along with
PAS-4