Summary
- The Companies Act, 2013 limits private placements to 200 persons per financial year for each type of security, as per Section 42 and Rule 14(2).
- This count includes existing shareholders and repeat offers to the same person are considered once towards the annual limit, though this interpretation remains unsettled.
- Equity shares, preference shares, and debentures are counted separately, with specific exclusions for qualified institutional buyers and employees under ESOPs.
- Exceeding the limit deems the offer a public one, attracting penalties under Section 42(11) and requiring compliance with various securities regulations.
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