Major changes in section 42 of CA, 2013 and rules for Private Placement

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Major changes in section 42 of CA, 2013 and rules for Private Placement

Ministry of Corporate Affairs issued the notification on 07.08.2018 with 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 makes the rules further to amend the Companies (Prospectus and Allotment of Securities) Rules, 2014. Major changes in provisions and rules are as follows:-

  1. Identified Persons: The persons to whom the private placement is to be made shall be first identified by Board.
  2. Utilization of Money: As per new provision, money raised through Private placement cannot be utilized unless allotment is made and the return of allotment is filed with ROC.
  3. Return of Allotment: Return of Allotment (Form PAS-3) shall be filed within 15 days from the date of allotment (earlier, it was 30 days).
  4. Non-convertible debentures: Private placement for non-convertible debentures can be made by board resolution, if such offer amount is not exceeding the limit specified in Section 180(1)(c) of Companies Act, 2013.
  5. The issue of Private placement offer letter: The Private Placement offer-cum-application letter shall be filed only after the relevant special resolution or board resolution shall be filed with ROC in Form MGT-14.
  6. Replacement of document: Form PAS-4 is replaced in the new rules.

Click here to view full notification 

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