1.

Conditions precedent

• allotments with respect to any offer or invitation made earlier have been completedor that offer or invitation has been withdrawn or abandoned by the Co. 
  [S. 42(3), R. 14(2)(b)] [Also refer # below]
• previous approval by SH by a Spl Reso, for each of the Offers or Invitations 
  [R. 14(2)(a)]
  • Spl Reso only once in a year sufficient for all the offers or invitation for non-convertible debentures during FY
• the basis or justification for the price (including premium, if any) disclosed explanatory statement annexed to the notice for GM
• offer of securities or invitation to subscribe securities to persons not > 200, (excluding QIBs, and employees of the Co being offered securities under ESOS as per section 62(1)(b)), in a FY (reckoned individually for each kind of security that is equity share, preference share or debenture). [S. 42(2), R. 14(2)(b)] 
  [Also refer # below]

  #Not applicable to NBFCs/HFCs registered with RBI/NHB respectively if they are complying with regulations made by RBI/NHB in respect of offer or invitation to be issued on private placement basis

2.

Offer

• To be made through issue of a PPOL in Form PAS-4
• To be accompanied by an application form serially numbered and addressed specifically to the person to whom the offer is made –
  • sent to him, either in writing or in electronic mode, within 30 days of recording the names of such persons in accordance with S. 42(7). [S. 42(1), R. 14(1)(a) & (b)]
• All offers covered u/s. 42 shall be made only to such persons whose names are recorded by the Co prior to the invitation to subscribe, and
• such persons shall receive the offer by name, and
• a complete record of such offers shall be kept by the Co in Form No. PAS-5 and
• a copy of such record in PAS 5 along with PPOL in Form PAS-4 to be filed with the RoC within 30 days of circulation of relevant PPOL. [S. 42(7)]
• ¹¹private placement offer and application shall not carry any right of renunciation
• Not to release any public advertisements or utilise any media, marketing or distribution channels or agents to inform the public at large about such an offer. [S. 42(8)]
• investment size not to be <₹ 20,000 of face value of the securities [R. 14(2)(c)] 
  [Also refer # Note at Conditions Precedent above]

3.

Payment of subscription money

• payment for subscription to securities shall be made from the bank a/c of the person subscribing to such securities [R. 14(2)(d)]
• in case of joint holders, it shall be paid from the bank account of the person whose name appears first in the application
• Co shall keep the record of the Bank a/c from where such payments for subscriptions have been received
• All monies payable towards subscription of securities on private placement basis u/s. 42 shall be paid through cheque/demand draft/other banking channels but not by cash [S. 42(5)]
• Monies received on application u/s. 42 shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than—
  • for adjustment against allotment of securities; or
  • for the repayment of monies where the Co is unable to allot securities.
• ¹²Co shall not utilise monies raised through private placement unless allotment is made and the return of allotment is filed with the RoC (Form PAS-3) in accordance with S. 42(8)

4.

Post offer closure compliances

• allot the securities within 60 days from the date of receipt of the application money for such securities [S. 42(6)]
• File Return of allotment with the RoC within ¹³15 days of allotment in Form PAS-3 along with a complete list of all security holders, with their full names, addresses, number of securities allotted and such other relevant information [S. 42(9), 
  R. 14(4)]
• Otherwise repay the application money to the subscribers within 15 days from the date of completion of 60 days
  • if the Co fails to repay the application money within the aforesaid period,
    • it shall be liable to repay that money with interest @ 12% p.a. from the expiry of the 60 days
    • The amount will be treated as ‘Deposit’ under Cos (Acceptance of Deposit) Rules
• Issue, deliver the certificate/s of securities allotted:
  • within 2 months from the date of allotment, in case of shares [S. 56(4)(b)]
  • within 6 months from the date of allotment, in case of debentures [S. 56(4)(d)]

  Where the securities are dealt with in a depository, intimate the details of allotment of securities to depository immediately on allotment of such securities

• Make necessary entries in the relevant registers