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Mgt 14

Dhara (Company Secretary) (298 Points)

01 March 2016

For allotment of shares in Private Placement for filing MGT 14 , what option is required to be selected for "Purpose of passing the resolution"

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20 Replies

Ram Kumar (188 Points)
Replied 01 March 2016

I dont thin we need to file MGT-14 for allotment of shares for this board resolution is enough in my openion.

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Dhara (Company Secretary) (298 Points)
Replied 01 March 2016

We dont even need to file MGT 14 for Registration of Resolution ?? (Shareholders resolution )

Bcoz in procedure its mentioned to file MGT 14 then GNL 2 and then PAS 3

N.K.Agarwal (CS) (44 Points)
Replied 01 March 2016

Hi Dhara

Form MGT-14 required to be filed for Issuance of Shares through Private Placement as per Section 179(3) of the Companies Act, 2013. In that case both shareholder approval (for Special Resolution) and Board resolution required to be filed with ROC in Form MGT-14

In case of allotment of Shares, only PAS-3 need to be filed.

N.K.Agarwal (CS) (44 Points)
Replied 01 March 2016

Hi Dhara

In case of allotment of Shares, only PAS-3 need to be filed.

Dhara (Company Secretary) (298 Points)
Replied 01 March 2016

I am alloting shares to an investor (individual) who is nor a director nor a member.. So in this case i only need to file GNL 2 (attachment PAS 4 & 5) and PAS 3 for allotment right.

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ACS Parul Rawat (Entrepreneur | Corporate Law Advisor | Lawyer in Making | AIR-8) (218 Points)
Replied 01 March 2016

U may fill the purpose as " Issue further shares to persons (whether or not including existing shareholders or employees)"

Ram Kumar (188 Points)
Replied 01 March 2016

Dear Dhara,

For allotmentment PAS-3 along with board resolution and list of allottees as attachment is enough.

No need to file MGT-14.

Ram Kumar (188 Points)
Replied 01 March 2016

Dear Dhara,

GNL-2 along with PAS-4& PAS-5 is suffice for this purpose (in GNL-2 select Private placement offer letter.)

Dhara (Company Secretary) (298 Points)
Replied 01 March 2016

Thank you Mr. Ram & N.K Agarwal .. @ Ms Parul - the purpose as " Issue further shares to persons (whether or not including existing shareholders or employees)" is for preferantial allotment u/s 62 and not for private placement

Megha Choudhary (Management Trainee) (541 Points)
Replied 01 March 2016

i have been given a issue regarding private placement. please suggest me the complete procedure of filing of documents in private placement what needs to be checked and what need to be done

pvt placement refers to filing of documents last year on back date basis

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Ram Kumar (188 Points)
Replied 01 March 2016

Dear Dhara,

You can select Others under Companies Act,2013 then section 42 and then private placement of equity shares. this will sufficient

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Dhara (Company Secretary) (298 Points)
Replied 01 March 2016

Dear Megha

STEPS INVOLVED IN PRIVATE PLACEMENT

STEP-1

Call Meeting of Board Director:

Issue Notice of Board Meeting to all the directors of company at least 7 days before the date of Board Meeting.
Attach Agenda of Board Meeting along with Notice.

STEP-II

Hold the Board Meeting:

Check the quorum of Board Meeting.
Identify the person to whom you will issue shares.
Prepare list of such persons.
Prepare Draft offer letter under PAS-4.
Pass Board Resolution for approval of offer letter.
Issue Notice of General Meeting. (As per Section- 101(1) issue notice of General Meeting at least 21 days before General meeting).
Notice shall specify place, date, day and the hour of the meeting and shall contain a statement on the business to be transact in thesuch meeting. [Section-101(2)]
Authorize a director of company to issue notice of General Meeting.

STEP-III

Hold Extra Ordinary general Meeting:

Check the quorum of Meeting. (Section-103).
Present Offer Letter in PAS-4 before the members of the meeting.
Pass Special Resolution for Private Placement of Shares. [For every such offer separate Special Resolution is required].

STEP-1V

Circulate Letter of Offer in form PAS-4:

Offer letter shall be accompanied by an application form serially numbered and addressed specifically to the person to whom the offer is made.
Offer Letter sent either in writing or electronic mode.
Issue offer letter within 30 days of General Meeting/recording the name of such person.

STEP-V

File Form with Registrar:

File MGT-14 with Registrar within 30 days of passing of Special Resolution.

Attachments:

Notice of General Meeting along with Explanatory Statement.
Certified True copy of Special Resolution.
Minutes of General Meeting

STEP-VI

Open Separate Bank Account:

The payment to be made for subscriptttion to securities shall be made from the bank account of the person subscribing to such securities.
The company shall keep the record of the Bank Account from where such payment for subscriptttion has been received.

STEP-VII

File Form with Registrar:

File GNL-2 with Registrar within 30 days of circulation of offer letter.

ATTACHMENTS:

PAS-4 (Offer Letter).
PAS-5 (Complete record of Private Placement).

STEP-VIII

Call Board Meeting after receiving of allotment of money.

Issue Notice of Board Meeting to all the directors of company at least 7 days before the date of Board Meeting. [Section-173(3)]
Attach Agenda of Board Meeting along with Notice.

STEP-IX

Hold the Board Meeting:

Check the quorum of Board Meeting.
Present List of Allottes before the Meeting.
Pass Board Resolution for allotment of shares (within 60 days of receiving of money).
Pass Resolution for issue of Share Certificate in same Meeting.
Authorize to two directors and a authorize person to sign share certificate.

STEP-X

File form with ROC:

File PAS-3 with Registrar of Company.

ATTACHMENTS:

List of Allottes.
Board Resolution for allotment of Shares.

STEP-XI

Issue Share Certificate:

Issue Share Certificate in Form- SH-1 (As per Section-56 with in 2 (two) months from the date of allotment of shares.

Note:

Special Resolution for Issued of Debenture: In case of Offer or invitation for non-convertible debenture, it shall be sufficient if the company pass a single Special Resolution of all the offers or invitation made for debenture during a year. No need to pass Resolution again and again for the Private Placement of Debenture in a year.
Renounce of Right: Right to acquire Shares under private placement offer can’t be renounce in favour of any other person. As per Rule-14sub-rule-1 proviso, No person other than the person so addressed in the application form shall be allowed to apply through such application form.

All earlier offers completed: A company can’t come with Private Placement offer until earlier offers are not completed.

Securities: It is also to be noted that the provisions for private placement applies to the issue of “securities” and not “shares”. Thus the new provisions have widened the scope and cover a whole host of instruments such as shares, bonds, debentures and other marketable securities etc.
Date of private placement offer letter shall be deemed to be the date of circulation of private placement offer letter.

CONCLUSION

Since the requirements for raising the funds by way of private placement have been made more stringent, it will significantly increase the compliance burden on private companies looking to raise funds through private placement. It is also to be noted that as no specific exemption has been provided for private companies or small companies, it will lead to reduce flexibility available to private companies and the companies operated by closely held people for the raising funds. However, the better governance of all companies is expected which will lead to the transparency in the affairs of the Company and accountability of the directors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.