means

Private placement

offer of securitiesinvitation to subscribe securities

To a selected group of persons

or

issue of a private placement offer letter. (PAS 4)

Public Company

Private Company

By complying withthe provisionsgiven in part II ofChapter 3(Prospectus andallotment ofsecurities) andSecurities laws (ifapplicable)

Non- banking financial company

which are registered with Reserve Bank of

India [RBI]

Housing finance company which are

registered with National Housing Bank [NHB]

Only if they are complying with

regulations made by RBI or NHB

Proposed offer of securities or invitation to subscribe securities has beenpreviously approved by the shareholders of the company, by passing SpecialResolution.

offer or invitation shall be made to not more than 200 persons in theaggregate in a financial year (Except Qualified Institutional Buyer andEmployees of the Company covered under ESOP Scheme)

the value of such offer or invitation per person shall be with an investment sizeof not less than 20000 rupees of face value of the securities

The payment shall be made from bank account of the person subscribing tosuch securities and company shall keep the record of the same.

A Company

through issue of offer letter in form PAS-4

makes an offer

To such no. of person whose name is recorded by co. prior

to offer

Within 30 days of recording the name

from the date of receipt of the application money

Make allotment

otherwise

repay the application

money

to repay the money along with

interest @ 12%

Within 15 daysFrom expiry of 60th day

expiry of the sixtieth day

Monies received on application shall be kept in a separatebank account in a scheduled bank & shall not be utilized forany purpose other than:-

• For adjustment against allotment of securities; or

• For the repayment of monies where the company is unable to allotsecurities.

File a return of allotment of

securities in Form

PAS-3

File form PAS-4(Private placement

offer letter)

& Form PAS -5

(complete record)

Registrar

Restriction

• Company offering securities are restricted to release any public advertisements orutilize any media, marketing or distribution channels or agents to inform the public atlarge about such an offer.

• If a company, listed or unlisted, makes an offer to allot or invites subscription, orallots, or enters into an agreement to allot, securities to more than 200 number ofpersons (Excluding QIB’s and employees of the Company being offered securitiesunder the scheme of ESOP), the same shall be deemed to be an offer to the publicand company needs to comply with the provisions of SEBI Act, 1992 and SecuritiesContact regulations Act, 1956.

Penal provision

• If a company makes an offer or accepts monies in contravention of this section thecompany, its promoters and directors shall be liable for a penalty which may extendto the amount involved in the offer or invitation or two crore rupees, whichever ishigher,

• the company shall also refund all monies to subscribers within a period of thirty daysof the order imposing the penalty.