MCA Updates: MCA replaced the section and rules for Private Placement

MCA, by issuing notification dated 07th August, 2018, has replaced provisions for Private Placement i.e. Section 42 of Companies Act, 2013 and Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014

Ministry of Corporate Affairs (MCA) has notified Section 10 of Companies Amendment Act, 2017 on 07th August, 2018 whereby replacing Section 42 of Companies Act, 2013 which is with respect to Private Placement. MCA has also issued a new Notification whereby amending Companies (Prospectus and Allotment of Securities) Rules, 2014. MCA has replaced Rule 14 of such rules by new Rule 14.

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 identified by Board. New section has specified such persons as "Identified persons"

2. Utilization of Money: As per new provision, money raised through Private placement can not be utilized unless allotment is made and 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. If the limit is exceeding, then  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.

5. 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.

Copy of notification of notifying Section 10 of Companies Amendment Act, 2017 can be found here.

Copy of notification amending rules dated 07th August, 2018 can be found here.

Notified copy of Companies Amendment Act, 2017 can be accessed below for ready reference.

Post a Comment