Overview – The allotment of shares can be done in two ways
•Public Issue.
•Private Placement.

Here we are explaining about private placement in the following manner:-
1.Meaning of Private Placement
2.Difference Between Public issue and Private Placement
3.List of MCA Documents need to be drafted
4.Steps for Private Placement

Meaning of Private Placement – Private Placement is a method of allotment of Shares which is commonly followed by Private Limited Companies where the shares have been allocated to known Parties.

Difference Between Public Issue and Private Placement:-

PUBLIC ISSUE:-
TYPES OF COMPANIES CAN ISSUE- Listed Company, Unlisted Company
OFFER LETTER- Prospectus
TYPE OF RESOLUTIONS NEED TO BE PASSED-No Resolution required

PRIVATE PLACMENT
TYPES OF COMPANIES CAN ISSUE-Listed Company, Unlisted Company, Private Company
OFFER LETTER-Private Placement Offer Letter
TYPE OF RESOLUTIONS NEED TO BE PASSED-Special Resolution

List of MCA Documents need to be drafted and filed with Registrar of Company –
1.PAS-04 – Private Placement Offer Letter
2.PAS-05 – It maintains the record of Private Placement
3.MGT-14 - It is filing of Special Resolution with the Registrar of Company

Steps for Private Placement –
1.Conduct a Board Meeting and Pass a Board Resolution for appointment of Registered Valuer and Merchant Banker for valuation of company.
2.After receiving valuation report from the Registered Valuer, the company needs to conduct a board meeting to pass a board resolution for approval of valuation report and select a date for Extra Ordinary Meeting.
3.As Per Companies Act 2013, the minimum Period for Extra-ordinary General Meeting notice is 21 days where shorter notice is also allowed by giving the consent for shorter notice.
4.Generally, Extra-ordinary General Meeting can pass both Ordinary and Special Resolutions where for the purpose of private placement the company need to pass special resolution.
5.In Extra-ordinary General Meeting after Passing Special Resolution, the MGT-14 need to be filed with Registrar of company then the company need to circulate Private Placement Offer Letter for each Identified Person along with relevant attachments.
6.After Circulation of PAS – 04 to identified persons and when the offer is open then the identified persons need to deposit the investment in Share Allotment Bank Account which is maintained by the company.
7.After completion of offer period, the company need to conduct a Board Meeting for the allotment of shares.
8.The Company need to file PAS-03 for the Identified Persons and issue share certificates in form SH-1 within 60 days from the date of receipt of money.


Thank You
Best Regards,
CMA Garjala Sai Pavan,
Lavanya and Associates.