Amendments in Private Placement section 42 of Companies Act 2013

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Amendments in Private Placement section 42 of Companies Act 2013

  • Time period for filing e-form PAS – 3 is reduced from 30 days to 15 days.

Earlier company is required to file the return of allotment e-form PAS – 3 with registrar of  companies within 30 days of allotment

Now, a company is required to file the return of allotment within 15 days of allotment instead of 30 days.

  • Where a company defaults in filing e-form PAS – 3 within 15 days of allotment, the company, its promoters and directors shall be liable with a penalty of Rs1000 per day but not exceeding Rs 2500000.
  • Company is not permitted to utilize the share application money received by it unless :
  1. allotment is made; and
  2. the return of allotment, in e-form PAS – 3, is filed with the Registrar of Companies.
  • The form PAS-4 has been revised and has a small section of application letter that needs to be filed in by the applicant. This application needs to be submitted by the applicant along with subscription money paid either by cheque, demand draft or other banking channel and not by cash.
  • The revised section specifically restricts any right of renunciation of the private placement offer that is been made by the issuer company. The earlier section and rules did not have the said restriction.
  • Earlier there was a restriction that no fresh offer or invitation can be made unless the allotment w.r.t. any earlier offer has been completed or the offer has been withdrawn or abandoned. Now a carve out has been provided that where the number of persons to whom the offer is made does not exceed 200, the company may, at any time, make more than one issue of securities to such class of identified persons.
  • Earlier there was requirement that investment size of security per person shall not be less than Rs 20000. This provision has been deleted by amendment in section 42 of Companies Act 2013
  • The penal provision has been revised

Earlier if a company makes an offer or accepts monies in contravention of this section, the company, its promoters and directors shall be liable for a penalty which may extend to the amount involved in the offer or invitation or two crore rupees, whichever is higher.

The amendment provides for upper limit of two crore rupees of penalty that can be levied on the company, its promoters and directors shall be liable for a penalty which may extend to the amount raised through the private placement or two crore rupees, whichever is lower.

 

 


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