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section42

santhuamma415@gmail.com (223 Points)

18 October 2018

section 42 is complied us 62 1 c what is the reason

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rahul (a) (1620 Points)
Replied 18 October 2018

Procedure for Private Placement / Preferential Allotment 1.Send Notice of Board Meeting as per section 173 of the Companies Act, 2013. 2.Convene a Board Meeting and pass following resolution: a) Decide the names of the subscribers to the issue. b) Prepare and Approve the Offer Letter in PAS-4. c) Prepare Share Application Form. d) Fix the Date, time, place of General Meeting and approve the notice and explanatory statement. 3.Send notice (along with explanatory statement) of the General Meeting to members, Directors as per section 101 and 102 of the Companies Act, 2013. 4.Send Offer Letter (Form PAS-4) alongwith Share Application Form to subscribers to issue within 30 days from the date of recording the name of the Persons in PAS-5 5.Hold EGM on the convened date and pass special resolution under section 62. 6.File Form MGT-14 within 30 days of passing Special Resolution along with Explanatory statement. 7.File Return of Allotment in PAS-3 within 30 days. Attachment to Form a) List of Allottees (LOA) b) LOA shall be certified by the signatory (Director/ CS) of Form. c) Valuation Report 8. Maintain the record of the Allotment of securities issued. 9. File PAS-4 and PAS-5 with ROC within 30days of circulation of relevant private placement Offer Letter in GNL-2.

ROC replied that there is no difference between private placement & preferential allotment under the companies act 2013. It is ROC opinion or comments on the question of similarity between the private placement & preferential allotment . Once we get into practice side we would understand that if a company , which could not able to raise further capital from the existing sharesholders under section 62 (1)(a) , could raise the required fund from the outsiders under section 62 (1)(c) by passing a special resolution in general body meeting ,but in this circumtance the company can not approach any unknown public becuase it is against the basic provisions of private limited or against the provisions stated in part I of chapter III of new companies Act 2013 if it is public company . The main underlying point emphasised in section 42 is that the pvt ltd company should be restricted from approaching unknown common public by issuing any kind of invitation for subscribing in shares and the public company should be prevented from escaping compliance of provisions stated in part I of chapter III of new company act because the sebi wants to protect interest of common investors And hence it may be inferred that irrespective of fact that whether a company has complied with section 42 while going thru 62(1)(c) or not , the company would not go beyond the provisions stated in clause 2 ( 68 ) if it is pvt limited company or the provisions contained in part I of chapter III of new act if it is public ltd company . So additional compliance with sec 42 while going thru sec 62(1)(c) route would not be necessciated if the company concerned takes care of compliances of relevant applicable provisions stated in the nature of restriction as explained above