The Companies (Prospectus and Allotment of Securities) Second Amendment Rules 2018 related to Private placement

The Companies (Prospectus and Allotment of Securities) Second Amendment Rules 2018 related to Private placement record to be maintained in Form PAS-5 – Notification

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

Government of India
Ministry of Corporate Affairs

Notification

New Delhi, the ………..07. August, 2018

G.S.R._ (E). – In exercise of  the powers conferred by section 42, read  with sub­ sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government  hereby  makes  the  following rules further  to amend  the Companies (Prospectus and Allotment of Securities) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2018.
(2) They shall come into force from the date of  their publication  in the Official Gazette.

2. In the Companies (Prospectus and Allotment of Securities) Rules, 2014 (hereinafter referred to as the principal rules), for rule 14, the following rule shall be substituted, namely:-

“14. Private placement.- (1) For the purposes of sub-section (2) and sub-section (3) of section 42, a company shall not make an offer or invitation to  subscribe to securities through private placement unless the proposal has been previously approved by the shareholders of the company, by a special resolution for each of the offers or invitations:

Provided that in the explanatory statement annexed to the notice for shareholders’ approval, the following disclosure shall be made:-

(a) particulars of the offer including date of passing of Board resolution;

(b) kinds of securities offered and the price at which security is being offered;

(c) basis or justification for the price (including premium, if any) at which the offer or invitation is being made;

(d) name and address of valuer who performed valuation;

(e) amount which the company intends to raise by way of such securities;

(f) material terms of raising such securities, proposed time schedule, purposes or objects of offer, contribution being made by the promoters or directors either as part of the offer or separately in furtherance of objects; principle terms of assets charged as securities:

Provided further that this sub-rule shall not apply in case of offer or invitation for non-convertible debentures, where the proposed abcaus.in amount to be raised through such offer or invitation does not exceed the limit as specified in clause (c) of sub-section of sub section (1) of section 180,and in such cases relevant Board resolution under clause (c) of sub­ section (3) of section 179 would be adequate:

Provided also that in case of offer or invitation for  non-convertible  debentures, where the proposed amount to be raised through such offer or invitation exceeds the limit as specified in clause (c) of sub-section (1) of section 180, it shall be sufficient if the company passes a previous special resolution only once in a year for all the offers or invitations for such debentures during the year.

(2) For the purpose of sub-section (2) of section 42, an offer or invitation to subscribe securities under private placement shall not be made to persons more than two hundred in the aggregate in a financial year:

Provided that any offer or invitation made to qualified  institutional buyers, or to employees of the company under a scheme of employees stock option as per provisions of clause (b) of sub-section (1) of section 62 shall not be considered while calculating the limit of two hundred persons.

Explanation.- For the purposes of this sub-rule, it is hereby clarified that the restrictions aforesaid would be reckoned individually for each kind of security that is equity share, preference share or debenture.

(3) A private placement offer cum application letter shall be in the form of an application in  Form PAS-4 serially numbered and addressed specifically to the person to whom the offer is made and shall be sent to him, either in writing or in electronic mode, within thirty days of recording the name of such person pursuant to sub-section (3) of section 42:

Provided that no person other than the person so addressed in the private placement offer cum application letter shall be allowed to apply through such application form and any application not conforming to this condition shall be treated as invalid.

(4) The company shall maintain a complete record of private placement offers in Form PAS-5.

(5) The payment to be made for subscription to securities shall be made from the bank account of the person subscribing to such securities and the company shall keep the record of the bank account from where such payment for subscript ion has been received:

Provided that monies payable on subscription to securities to be held by joint holders shall be paid from the bank account of the person whose name appears first in the application:

Provided further that the provisions of this sub-rule shall not apply in case of issue of shares for consideration other than cash.

(6) A return of allotment of securities under section 42 shall be filed with the Registrar within fifteen days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 along with a complete list of all the allottees containing-

(i) the full name, address, Permanent Account Number and E-mail ID of such security holder;

(ii) the class of security held;

(iii) the date of allotment of security;

(iv) the number of securities held, nominal value and amount paid on such securities; and particulars of consideration received if the securities were issued for consideration other than abcaus.in cash.

(7) The provisions of sub-rule (2) shall not be applicable to-

(a) non-banking financial companies which are registered with the Reserve Bank of India under the Reserve Bank of India Act, 1934 (2 of 1934); and

(b) housing finance companies which are registered with the National Housing Bank under the National Housing Bank Act, 1987 (53 of 1987),

if they are complying with regulations made by the Reserve Bank of India or the National Housing Bank in respect of offer or invitation to be issued on private placement basis:

Provided that such companies shall comply with sub-rule (2) in case the Reserve Bank of India or the National Housing Bank have not specified similar regulations.

(8) A company shall issue private placement offer cum application letter only after the relevant special resolution or Board resolution has been filed in the Registry:

Provided that private companies shall file with the Registry copy of the Board resolution or special resolution with respect to approval under clause (c) of sub­ section (3) of section 179.

3.  In the principal rules, in the Annexure, –

(i) for “Form No. PAS-4”, the following Form shall be substituted, namely:-

“FORM PAS – 4
[see rule 14(3)] Part-  A

PRIVATE PLACEMENT OFFER CUM APPLICATION LETTER

(ii) in Form PAS-5, for the brackets, words and figures “(Section 42(7) and Rule 14(3) of the Companies (Prospectus and Allotment of Securities) Rules, 2014)”, the brackets, words and figures “[see rule 14(4)]” shall be substituted.

[File No. 1/21/2013-CL-V]

(K. V. R. Murty)
Joint Secretary to the Govenment of India

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Note:- The principal rules were published in the Gazette of  India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 251(E), dated the 31st March, 2014 and subsequently amended vide number G.S.R. 424(E), dated the 30th June, 2014 and number G.S.R. 430 (E), dated the 7th May, 2018.