1.

Conditions precedent

• allotments with respect to any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or abandoned by the Co. [S. 42(3), R. 14(2)(b)] [Also refer # below]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 in 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 S. 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)]
• private 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.
• Co 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 15 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 Co (AoD) 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