13 October 2022
Private companies may issue share and have shareholders, but their shares do not trade on public exchanges and are not issued through an initial public offering (IPO).
15 October 2022
Issue of Private Limited Company Shares via Private Placement A firm can make a private placement to a small group of people under Section 42 of the Companies Act, 2013. A private placement offer letter is a letter in which a company offers its shares or invites a select group of people to subscribe to its securities in lieu of a public offering.
In a financial year, the number of persons to whom the firm can make a private placement should not exceed fifty or such a greater number as the Rules require. Qualified institutional buyers and employees of the company who are offered securities in the financial year under a scheme of employees’ stock options under Section 62 of the Act are not included in the fifty-person limit.
KNOW THE BENEFITS OF SHARE TRANSFER
Issue of Private Limited Company Shares via Rights Issue According to section 62 of the Act, whenever a corporation with a share capital seeks to enhance its subscribed capital by issuing more shares, those shares must be offered—
to its existing investors’ employees under a stock option scheme, subject to a special resolution passed by the company if the price of such shares is determined by the valuation report of a registered valuer, to any persons, whether or not those persons include the persons referred to in clauses (a) or (b), for cash or for a consideration other than cash, if it is authorised by a special resolution.
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