CA Intermediate · Corporate and Other Laws · Prospectus and Allotment of Securities
Aarav Pharma Ltd, an unlisted public company, wants to invite offers for its securities from 150 identified persons through a private placement. Which condition is correct for such a private placement?
A private placement must be made only to pre-identified persons whose names are recorded, and the offerees cannot exceed 200 in a financial year, excluding qualified institutional buyers and ESOP employees. It cannot be advertised publicly, so the offer to 150 identified persons is valid if these conditions are met.
- AIt is allowed to any number of persons since the offer is not public
- BThe offer must be made only to persons whose names are recorded beforehand, and it cannot exceed the prescribed limit of 200 persons in a financial year (excluding qualified institutional buyers and employees under ESOP)Correct
- CThe offer can be made through advertisement to the general public
- DNo application form or record of the offerees is needed
Explanation
A private placement is made to a select group of identified persons whose names are recorded, and the number of offerees is capped at 200 in a financial year, excluding qualified institutional buyers and employees under ESOP. It cannot be advertised to the public. An offer to 150 identified persons fits within the limit.
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