Issue of shares on private placement basis
Private placement refers to offer of securities or any invitation to subscribe to securities by any company to a selected group of investors. Preferential allotment, on the other hand. refers to issue of shares or other securities by a company to any select person or group of persons on a preferential basis and does not include shares or other securities offered through a public issuePrivate Placement and Rights Issues are hotly debated topics for Companies. Companies get confused between the two while opting for further issue of shares. Private Placement is dealt in Section 42 and section 62(1)(c) of Companies Act, 2013 while Section 62(1)(a) deals with Rights issue. issue of shares on private placement basis
Issue of shares on private placement basis: Section 42. (1) A company may, subject to the provisions of this section, make a private placement of securities. (2) A private placement
Issue of shares on private placement basis7th August 2018 notified as commencement date of section 10 of the Companies (Amendment) Act, 2017 [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (ii) Government of India Ministry of Corporate Affairs. Board Resolution for Issue of Shares on Preferential basis via Private Placement and approval of Letter of Offer in Form PAS4& Record of Private Placement in form PAS5 RESOLVED THAT pursuant to Section 62(1)(c) read with Section 42 of the Companies Act, 2013, Rule 13 of Companies (Share Capital and Debentures) Rules, 2014 and Rule 14 ofissue of shares on private placement basis ISSUE OF SHARES ON PRIVATE PLACEMENT BASIS UNDER COMPANIES ACT 2013. In a laymans language, when the securities are offered to the selective group of persons by issuing private placement offer, it is known as the Private Placement. Section 42 of the Companies Act, 2013 read along with the Rule 14(1) of Companies (Prospectus and Allotment of Securities) Rules, 2014 regulates the Private Placement of Shares.