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ISSUE OF SHARES ON PRIVATE PLACEMENT

Corporate Laws / Banking / SEBI - By: - Mr. M. GOVINDARAJAN - Dated:- 8-1-2018 - Introduction Section 42 of the Companies Act, 2013 ( Act for short) provides the procedure for offering or inviting for subscription of securities on private placement. This section came into effect from 01.04.2014. This section has been substituted by Companies (Amendment) Act, 2017 ( amended act for short) vide clause 10. The amendment Act got the assent of the President on 03.01.2018 but none of the provisions ca .....

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ection provides that a company may, subject to the provisions of section 42 make a private placement of securities. Private placement Explanation 1 to new section 42 defines the expression private placement as an offer or invitation to subscribe or issue of securities to a select group of persons by a company, other than by way of public offer, through private placement offer-cum-application, which satisfies the conditions specified in this section. Qualified Institutional Buyer Explanation 2 to .....

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es that a private placement shall be made only to a select group of persons who have been identified by the Board, whose number shall not exceed 50 or such higher number as may be prescribed. This number excludes the qualified institutional buyers and employees of the company being offered securities under a scheme of employees stock option in terms of provisions of 62(1)(b) of the Act in a financial year subject to such conditions as may be prescribed. Application A company making private place .....

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ns, whether the payment for the securities has been received or not or whether the company intends to lists its securities or not on any recognized stock exchange in or outside India, the same shall be deemed to be an offer to the public and shall accordingly be governed by the provisions of Part I of Chapter III of the Act. Application money Every identified person willing to subscribe to the private placement issue shall apply in the private placement. The applicant shall pay subscription mone .....

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any time, make more than one issue of securities to such class of identified persons as may be prescribed. Allotment A company, making an offer or invitation, shall allot its securities within 60 days from the date of receipt of the application money for such securities. If the company is not able to allot the securities within that period, it shall repay the application money to the subscribers within 15 days from the expiry of sixty days. If the company fails to repay the application money wit .....

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