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A private placement essentially involves the sale of securities to small number of selected investors. Mostly with investors involved in Private Placements can include large banks, mutual funds, insurance companies and pension funds
Private placement according to the Companies Act, 2013 cannot exceed 50 members in normal circumstances. Company making an offer of placing the securities shall allot the same within 60 days from receipt of payment of application money.
Here is a step-by-step guide for entire process:
- Issue notice for board meeting alongwith its specific agenda at least 7 days prior.
- Hold a Board Meeting.
- Identify to whom the placement is to be done.
- Pass Board Resolution for approval
- Issue notice of General Meeting
- Hold Extraordinary Meeting and present the resolution before the members.
- Pass resolution for Private placement of shares
- Sending of offer letter
- File Form MGT-14 with the Registrar of Companies
- Separate bank account shall be opened for the money amount received against the issued securities
- Call for board meeting after receiving of the money
- File PAS-3 with the Registrar of Companies
- Issue Share certificates and update Register.
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