Issues Of Securities Through Private Placement
Issuing securities through private placement can be a valuable tool for companies seeking capital, but it also comes with specific challenges and requires careful consideration. Here are some key issues to be aware of
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What is the Issue of Securities Through Private Placement?
Issue of Securities through Private Placement occurs when a company makes an offering of securities to an individual or group of investors. This offering does not qualify as a public sale of securities. It does not have to be registered with the Securities Exchange Commission. It is a cost-effective way of raising capital for small businesses without going public.
Process of Issuing Shares Through Private Placement
Step 1: Share requirements + documents
Share your requirements and the list of documents mentioned below.
Step 2: Pass the board resolution
A resolution would be passed to brief out about details of the issue.
Step 3: Filing of MGT-14
Step 4: Issue PAS-4 to the proposed investor
We will send an offer to subscribe to the company securities through a private placement offer letter in Form PAS-4.
Step 5: Received investment in company bank account
The amount will be transferred from the investor to the company’s current bank account.
Step 6: Filing PAS-3
We will file the e-form PAS -3 which needs to be filed within thirty days of allotment.
Step 7: Issue share certificate
Share certificates would be issued to the shareholders.
Step 8: Sharing deliverables
We will share the Resolution and other relevant documents relating to the allotment of security, Filed e-forms and Challans, Share Certificates, and Valuation Report
Documents Required for Private Placement
- Copy of PAN of all investors
- Valuation Report
- Bank Statement (After receipt of investment amount)
Key Deliverables
- Resolution and other relevant documents relating to the allotment of security
- Filed e-Forms and Challans
- Share Certificates
- Valuation Report
Why choose Wazzeer?
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One platform for all your requirements
Incorporation is just the first step. Wazzeer supports you throughout your journey as an entrepreneur. Log in to get things done efficiently. A dedicated Account Manager offers the required human touch and acts as an advisor to you.
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Experienced professionals
Our professionals have at least 5 years of experience and have incorporated thousands of companies among them. The rich experience ensures that the process is smooth and right in the first go.
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Defined process
Over the last few years, doing over 500 incorporations, we have defined every step of the process. A virtual process is in place enabling us to deliver hassle free experience for you.
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Cost Effective
You pay what you see in the proposal. No surprises or hidden charges.
Frequently Asked Questions
What is the stamp duty that needs to be paid to issue Share Certificates?
Stamp duty for Share Certificates varies from state to state. However in majority of the states, the stamp duty is 1% of the investment amount.
Who issues the Share Certificate to the investors or new shareholders?
Share Certificates are issued to the shareholders by the company after paying the requisite stamp duty. In case the paid-up capital of the company is less than Rs 50 lakhs, it is signed by the Directors of the company and for the cases where the paid-up capital is more than Rs 50 lakhs, a Company Secretary (on the payroll of the company) needs to sign it.
Do we need a separate bank account for the investment coming in?
In case the company is using the private placement of shares method to raise capital, a separate bank account should be used to receive the investment. In case the company issues shares via Rights issue, the investment can come to the company’s primary bank account.
What is the difference between offering shares to the investors by Rights issue or private placement of shares and share transfer?
Share transfer is the transfer of share from an existing shareholder to the investor. The money, in this case, goes to the shareholders selling their shares. They will need to pay the applicable income tax. In the case of Rights issue or Private placement of shares, fresh shares are issued by the company in lieu of the investment amount.