Private Placements of Share – Startup Services | Company Registration | Company Services | Compliance Services

What is the meaning Private Placement of Shares?

A Private Placement is 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. Securities issued as private placements include debt, equity, and hybrid securities

Need for Private Placement of Shares:

Private placement is a common method of raising business capital through offering equity shares. Private placements can be done by private companies wishing to acquire a few select investors. Private placement is an issue of stock either to an individual person or corporate entity, or to a small group of investors.

Steps Involved for Private Placement of Shares:

Step-1: Convene the Meeting of Board of Directors of the Company:

To check provision in Article regarding Private Placement. Decide on further capital requirements. Preparation of Board Meeting notice, agenda and convene the board meeting for approval of private placement. Prepare Offer Letter, Prepare the list of persons to whom the option will be given. Issue the notice to the shareholders to convene an Extraordinary General Meeting.

Step-2: Convene an Extraordinary General Meeting (EGM) of Shareholders:

The next step is to seek approval of the shareholders of the company. Pass special resolution in this regard at duly convened Extraordinary General Meeting (EGM) of Shareholders for approval of private placement of shares and approve Draft Offer Letter.

Step-3: Filing of Form with RoC in MGT-14:

Within 30 days of passing special resolution for approval of private placement of shares in form MGT-14 has to be filed with RoC with certified copy of special resolution, Notice of EGM and any other required attachments, if any.

Step-4: Issue letter of offer and prepare record of private placement:

Issue offer letter in PAS-4 within 30 days of record of name of persons and Prepare complete record of Private Placement in PAS-5.

Step-5: Filing of PAS-4 and PAS-5 with RoC:

File PAS-4 and PAS-5 with RoC within 30 days of issue of offer letter in form GNL-2.

Step-6: Convene the Meeting of Board of Directors of the Company:

Preparation of Board Meeting notice, agenda and convene the board meeting to approve allotment of shares within 60 days of receipt of Money from the persons to whom right was given. Issue notice to all the directors of the Company. Pass board resolution for approving allotment of shares.

Step-7: Filing of Form with RoC in PAS-3:

Within 30 days of passing board resolution form PAS-3 has to be filed with RoC with list of allottees, board resolution and any other required attachments, if any.

Step-8: Issue Share Certificates:

Issue share certificate to the members.

Documents Required for Private Placement:

List of directors and shareholders of the Company.
Proposed further capital requirements.
Existing MOA and AOA of the Company.
Details of group of persons to whom the offer will be given.
Digital Signature (DSC) of any one of the Director of the Company.