Dear Experts,I got to know that company may issue its shares on private placement basis.Please let …
Dear Experts,
I got to know that company may issue its shares on private placement basis.
Please let me know what is private placement of securities?
Thanks in advance.
The company have many sources to raise fund. Private placement of shares is one among such many options.
Since a private company can not call the public to buy its shares, it raises capital offering its shares to the pre-specified selected person or group. So when company issue shares under this basis, it offers shares only to the selected numbers of investors.
Section 42 of the companies act, 2013 also defines private placement.
As per this section, a private placement is an offer of securities to subscribe securities to a select group of persons by issuing private placement offer letter. And the company can make an invitation or offer only up to 50 persons in a year.
