Company Law

Private Placement vis-à-vis Preferential Offer

Private placement means

Preferential Offer means

any offer or invitation to subscribe or issue

an issue

of securities

of shares or other securities

[i.e. equity shares, fully convertible debentures, partly convertible debentures or any other securities, which would be convertible into or exchanged with equity shares at a later date]

to a select group of persons

to any select person or group of persons on a preferential basis

by a company

by a company

(other than by way of public offer)

[by its nature, it also does not include rights issue, employee stock option scheme, employee stock purchase scheme or an issue of sweat equity shares or bonus shares or depository receipts issued in a country outside India or foreign securities]

does not include shares or other securities offered through a public issue, rights issue, employee stock option scheme, employee stock purchase scheme or an issue of sweat equity shares or bonus shares or depository receipts issued in a country outside India or foreign securities

through private placement offer-cum-application

which satisfies the conditions specified in S. 42

Private placement need not necessarily be Preferential Offer

Preferential Offer must be Private placement