Private placement v/s preferential allotment

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Swati Sethi (Querist)
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07 December 2014 What is the difference between Prefrential allotment and Private Allotment? As per my understanding there is no difference between the two terms as per Companies Act, 2013. Do ICDR Regulations differntiate between the two?

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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08 December 2014
PREFERNTIAL ALLOTMENT - It means an issue of shares or other securities, by a Company
to any select group of persons on a preferential basis.

PRIVATE PLACEMENT- It means any offer of securities or invitation to subscribe securities to a select group of persons by a Company through issue of a private placement offer letter.

As per ICDR Regualtions “preferential issue” means an issue of specified securities by a listed issuer to any select
person or group of persons on a private placement basis and does not include an offer of specified securities made through a public issue, rights issue, bonus issue, employee stock option scheme, employee stock purchase scheme or qualified institutions placement or an issue of sweat equity shares or depository receipts issued in a country outside India or foreign securities;

ICDR is silent on definition of private placement