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Private Placement by unlisted public and private companies

"ISSUE OF SHARES UNDER PRIVATE PLACEMENT BY UNLISTED PUBLIC AND PRIVATE LIMITED COMPANIES An unlisted public company and private companies can issue shares under"<br>TaxGuru is a platform that provides Updates On Amendments in Income Tax, Wealth Tax, Company Law, Service Tax, RBI, Custom Duty, Corporate Lawu00a0, Goods and Service Tax etc.<br>To know more visit https://taxguru.in/company-law/private-placement-unlisted-public-private-companies.html

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Private Placement by unlisted public and private companies

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  1. PRIVATEPLACEMENTBYUNLISTEDPUBLIC ANDPRIVATECOMPANIES https://taxguru.in/company-law/private-placement-unlisted-public-private-companies.html ISSUEOFSHARESUNDERPRIVATEPLACEMENTBYUNLISTEDPUBLICANDPRIVATE LIMITEDCOMPANIES An unlisted public company and private companies can issue shares under Private Placement offer pursuant to Section 42 & 62 (1) (c) ofCompanies Act, 2013(Act) and Rule 13 of Companies (Share Capital and Debentures)Rules,2014andRule14ofCompanies(Prospectusand AllotmentofSecurities)Rules, 2014. WhenPrivatePlacementcanbeoptedforissuanceofshares: Whensharesaresupposedtobeissuedtopersons,whoarenotexistingshareholdersnoremployeesof theCompany; Wheresharesareissuedtotheselectedgroupofexistingshareholders;or Whensharesareissuedforconsiderationotherthancash. Procedure: PassingofBoardresolutionforappointmentofValuerforvaluationofsharesandValuationof considerationin casewhere shares areissued for considerationother than cash. Passing of Board Resolution for issuance of shares under private placement offer and issuance of Notice ofGeneral meeting along withexplanatory statement. PassingofSpecialResolution. FilingofMGT-14within30daysfromthedateofpassingofspecialresolution. IssuanceofPrivatePlacementoffercumapplicationletter(FormPAS-4) EntryinPAS-5(RecordofPrivatePlacement). OpeningofSeparateBankAccountinScheduleBank. AllotmentofShares. EntryinRegisterofMembers(MGT-1)

  2. 10.FilingofReturnofAllotment(PAS-3)within15daysfromthedateofallotment.10.FilingofReturnofAllotment(PAS-3)within15daysfromthedateofallotment. TimelineinPrivatePlacementOffer Within30daysfromthedateofrecordingthe IssuanceofPrivatePlacementoffercumapplication (PAS-4) 2 ofsuchpersonasidentifiedpersonpursuantto section42(3). Within60daysfromthedateofreceiptof applicationmoney Within12monthsfromthedateofpassingof SpecialResolution. Within15daysfromthedateofAllotment 3 AllotmentofSecurities 4 5 CompletionofAllotment FilingofReturnofAllotment Valuation Pursuant to Section 62 (1) (c) of the Act, valuation of Shares shall be determined on the basis valuation report issued by the registered valuer and pursuant to Rule 13 (g) of The Companies (Share Capital and Debentures) Rules, 2014, price of shares or other securities issued under preferential offer, whether or not it has been issued for consideration other than cash or in cash, shall be determined on the basis of valuation report issued by the registeredvaluer. Further,wherethesharesorsecuritiesareissuedforconsiderationotherthancash,valuationofsuch considerationshall bedetermined by avaluation report issuedby a registeredvaluer. ImportantProvisions An offer or invitation to subscribe securities under private placement shall not be made to persons (other than Qualified Institutional Buyers and employees of the Company to whom securities are issued pursuant to section 62(1) (b) of the Act)exceeding 200 in a F.Y. Providedthattheaboveprovisionshallnotbeapplicableto- NBFCswhichareregisteredwiththeReserveBankofIndiaundertheReserveBankofIndiaAct,1934; and HousingFinanceCompanieswhichareregisteredwiththeNationalHousingBankundertheNational HousingBank Act, 1987 If they are complying with regulations made by the Reserve Bank of India or the National Housing Bank in respectof offer or invitationto be issued onprivate placement basis.

  3. Further theabovelimitshallbeapplicable toNBFCsandHousingFinanceCompanies, whereRBIandNHBhas notspecified similar regulations. PrivatePlacementOfferandapplicationshallnotcarryanyrightofrenunciation. Subscriptionmoneypayablebytheidentifiedpersonforallotmentofsecuritiesshallbeeitherby chequeor demand draftor other banking channeland not by cash. The Company shall not utilise the money raised through Private Placement offer unless Return of Allotment(PAS-3) has been filedwith the Registrar. No fresh offer or invitation of Private Placement shall be issued unless the allotment of previous offer/invitationhasbeencompletedorpreviousoffer/invitationiswithdrawnorabandonedbythe Company.

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