{"id":28267,"date":"2025-01-15T16:57:37","date_gmt":"2025-01-15T11:27:37","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=28267"},"modified":"2025-08-20T18:08:40","modified_gmt":"2025-08-20T12:38:40","slug":"pvt-ltd-company-in-india","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/pvt-ltd-company-in-india\/","title":{"rendered":"Private placement procedure in a Pvt Ltd Company in India"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d61986db43b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d61986db43b\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/pvt-ltd-company-in-india\/#Private_placement_procedure_in_a_Private_Limited_Company_in_India\" title=\"Private placement procedure in a Private Limited Company in India\">Private placement procedure in a Private Limited Company in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/pvt-ltd-company-in-india\/#Step-by-step_Private_Placement_Procedure\" title=\"Step-by-step Private Placement Procedure:\">Step-by-step Private Placement Procedure:<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/pvt-ltd-company-in-india\/#Preparation_of_Offer_Letter_PAS-4\" title=\" Preparation of Offer Letter (PAS-4): \"> Preparation of Offer Letter (PAS-4): <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/pvt-ltd-company-in-india\/#Key_Note_on_Private_Placement_Procedure\" title=\"Key Note on Private Placement Procedure:\">Key Note on Private Placement Procedure:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/pvt-ltd-company-in-india\/#Limits_and_Exemptions_on_Private_Placement_Procedure\" title=\"Limits and Exemptions on\u00a0Private Placement Procedure:\">Limits and Exemptions on\u00a0Private Placement Procedure:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/pvt-ltd-company-in-india\/#Penalties_for_Non-Compliance\" title=\"Penalties for Non-Compliance:\u00a0\">Penalties for Non-Compliance:\u00a0<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-23532\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/10\/Amends-in-IBC-Regulations-in-Liquidation-process.jpeg\" alt=\"Amends in IBC Regulations in Liquidation process\" width=\"1022\" height=\"585\" \/><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Private_placement_procedure_in_a_Private_Limited_Company_in_India\"><\/span><span style=\"color: #000080;\"><strong>Private placement procedure in a Private Limited Company in India<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The private placement procedure in a private limited Company in India is governed by Section 42 of the Companies Act, 2013 and the relevant rules under the Companies (Prospectus and Allotment of Securities) Rules, 2014. Not more than 200 persons in a financial year (excluding QIBs and ESOP allottees). Private placement must not involve any general solicitation or advertisement. Money must come from the bank accounts of the subscribers. Company, promoters, and directors may face hefty penalties for violations. Below is a detailed step-by-step guide:<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Step-by-step_Private_Placement_Procedure\"><\/span><a href=\"https:\/\/carajput.com\/archives\/private-placement-procedure.pdf\"><span style=\"color: #000080;\"><strong>Step-by-step Private Placement Procedure:<\/strong><\/span><\/a><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-28268\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/Procedure-for-Private-Placement.jpg\" alt=\"Procedure-for-Private-Placement.\" width=\"937\" height=\"1193\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/Procedure-for-Private-Placement.jpg 600w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/Procedure-for-Private-Placement-236x300.jpg 236w\" sizes=\"(max-width: 937px) 100vw, 937px\" \/><\/p>\n<ol>\n<li><strong> Board Meeting: <\/strong>Convene a Board Meeting to:\n<ul>\n<li>Approve the issue of securities through private placement.<\/li>\n<li>The Approve the preparation of the Offer Letter (Form PAS-4).<\/li>\n<li>Approve calling a general meeting of shareholders (if necessary, for special resolutions).<\/li>\n<li>Identify the persons to whom the securities will be offered.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<ol start=\"2\">\n<li><strong> General Meeting: <\/strong>Convene a General Meeting of Shareholders to pass a Special Resolution under Section 42 and 62(1)(c) of the Companies Act, 2013, authorizing:<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>The issue of securities.<\/li>\n<li>Number of securities and their price.<\/li>\n<li>Terms and conditions of the offer.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"3\">\n<li><strong> Filing of MGT-14: <\/strong>File the Special Resolution with the Registrar of Companies (RoC) in Form MGT-14 within 30 days of passing the resolution, if required.<\/li>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Preparation_of_Offer_Letter_PAS-4\"><\/span><span style=\"color: #000080;\"><strong> Preparation of Offer Letter (PAS-4): <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ol>\n<p style=\"padding-left: 40px;\">Prepare the Offer Letter (Form PAS-4), ensuring it includes:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Terms of the offer.<\/li>\n<li>Purpose of the offer.<\/li>\n<li>Details of securities being offered.<\/li>\n<li>Number of persons to whom the offer is being made.<\/li>\n<li>The offer letter must be issued to not more than 200 persons in a financial year (excluding QIBs and employees offered securities under ESOP). Offer must not constitute a public offer.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"5\">\n<li><strong> Maintenance of Records (PAS-5): <\/strong>Maintain a complete record of the private placement offer in Form PAS-5, including details of allottees, their PAN, and the number of securities allotted.<\/li>\n<li><strong> Opening a Separate Bank Account: <\/strong>Open a separate Bank account to receive the subscription money. Ensure the subscription money is paid through cheque, demand draft, or banking channels and not in cash.<\/li>\n<li><strong> Allotment of Securities: <\/strong>Convene a Board Meeting to:<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Approve the allotment of securities within 60 days of receiving the application money.<\/li>\n<li>Issue share certificates to the allottees within 60 days of allotment.<\/li>\n<li>File a return of allotment in Form PAS-3 with the RoC within 15 days of allotment.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"8\">\n<li><strong> Filing Form PAS-3 : <\/strong>File Form PAS-3 (Return of Allotment) with the following attachments:<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Certified copy of the Board Resolution for allotment.<\/li>\n<li>List of allottees, including name, address, and PAN.<\/li>\n<li>Certified copy of the Special Resolution (if applicable).<\/li>\n<li>Details of the securities issued.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"9\">\n<li><strong> Updating Statutory Registers: <\/strong>Update the following statutory registers:\u00a0Register of Members (for shares),\u00a0Register of Debenture Holders (for debentures),\u00a0Register of Charges (if applicable).<\/li>\n<\/ol>\n<ol start=\"10\">\n<li><strong> Issue of Share Certificates: <\/strong>Issue share certificates to the allottees within 2 months from the date of allotment. Stamp duty on share certificates must be paid as per the applicable state laws.<\/li>\n<\/ol>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-28273\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/3.jpeg\" alt=\"Private placement procedure in a Private Limited Company in India\" width=\"1200\" height=\"726\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/3.jpeg 1200w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/3-300x182.jpeg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/3-1024x620.jpeg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/3-768x465.jpeg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/3-800x484.jpeg 800w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-28274\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/4.jpeg\" alt=\"Private placement procedure in a Private Limited Company in India\" width=\"1200\" height=\"732\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/4.jpeg 1200w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/4-300x183.jpeg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/4-1024x625.jpeg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/4-768x468.jpeg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/01\/4-800x488.jpeg 800w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<p><strong>Post-Compliance:<\/strong>\u00a0Ensure compliance with ongoing filing requirements and maintain transparency in the records.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Key_Note_on_Private_Placement_Procedure\"><\/span><span style=\"color: #000080;\"><strong>Key Note on <\/strong><strong>Private Placement Procedure:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><span style=\"color: #000080;\">Definition and Key Provisions Related to Private Placement Procedure: <\/span>Private Placement: Offering or inviting to subscribe to securities to a select group of persons, excluding public offers, through a Private Placement Offer Letter (Form PAS-4).\u00a0Cannot involve public advertisements or marketing channels.<\/li>\n<li>Securities Covered: Equity shares, preference shares, Debentures.<\/li>\n<li>MGT-14 Filing: Mandatory within 30 days of passing the board resolution.<\/li>\n<li>Existing Shareholders: Permitted as it qualifies as an offer to a select group.<\/li>\n<li>200 Persons Limit: Applies separately to each type of security.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Limits_and_Exemptions_on_Private_Placement_Procedure\"><\/span><span style=\"color: #000080;\"><strong>Limits and Exemptions on\u00a0Private Placement Procedure:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Maximum Subscribers: Up to 200 persons per financial year for each type of security. Excludes: Qualified Institutional Buyers (QIBs) and\u00a0Employees under ESOPs (per Section 62).<\/li>\n<li>Minimum Investment: Subscription size of INR 20,000 face value per person.<\/li>\n<li>Exemptions: NBFCs and Housing Finance Companies registered with RBI or NHB.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Penalties_for_Non-Compliance\"><\/span><span style=\"color: #000080;\"><strong>Penalties for Non-Compliance:\u00a0<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Company, Directors, Promoters<span style=\"font-size: 16px;\">: <\/span><span style=\"font-size: 16px;\">Penalty: Higher of the offer amount, or \u20b92 crore. and required to <\/span><span style=\"font-size: 16px;\">Refund all subscription monies within <\/span>30 days of the penalty order<span style=\"font-size: 16px;\">.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Private placement procedure in a Private Limited Company in India The private placement procedure in a private limited Company in India is governed by Section 42 of the Companies Act, 2013 and the relevant rules under the Companies (Prospectus and Allotment of Securities) Rules, 2014. Not more than 200 persons in a financial year (excluding &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[10316],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/28267"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=28267"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/28267\/revisions"}],"predecessor-version":[{"id":28271,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/28267\/revisions\/28271"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=28267"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=28267"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=28267"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}