Private Placement:- Private Placement means any offer of securities or invitation to subscribe securities (equity or securities that convert to equity) to a select group of persons by a company, other than by way of public offer, through issue of a private placement offer letter. A private placement offer cannot be made to more than 200 people in aggregate in a financial year excluding “qualified institutional buyers” and employees of the company being offered securities under a scheme of employee’s stock option
Private placement is an issue of stock either to an individual person or corporate entity, or to a small group of investors. Investors typically involved in private placement issues are either institutional investors, such as banks and pension funds, or high-net-worth individuals.
Securities under Private Placement can only be issued to a group of maximum 200 people in aggregate in a financial year, excluding QIP & ESOP. It is to be noted that the limit of 200 people is per security. (i.e., 200 for equity shares, 200 for preference shares, 200 for debentures, etc.)
If the Company fails to allot the securities within 60 days, then it shall repay the application money to the subscribers within 15 days from the expiry of 60 days.
Form PAS-4 is a Private Placement Offer Cum Application Letter.
Form PAS-5 Record of a private placement offer to be kept by the Company.