CA Intermediate · Corporate and Other Laws · Prospectus and Allotment of Securities
Ananya Pharma Ltd, an unlisted public company, wants to issue shares to a select group of identified persons through private placement. Which of the following is correct under the Companies Act, 2013?
A private placement must be made to identified persons not exceeding 200 in a financial year, leaving out qualified institutional buyers and ESOP employees, and money must be received through banking channels. It cannot be made through public advertisement, and cash payment is not permitted.
- AThe offer can be made to any number of persons without a limit because it is not a public offer
- BThe offer can be made only to a pre-identified person group not exceeding 200 persons in a financial year, excluding qualified institutional buyers and employees under ESOP, and payment must be made through banking channelsCorrect
- CThe offer can be made to up to 500 persons and cash payment is allowed
- DThe offer can be made through advertisement to the general public if the company is unlisted
Explanation
Private placement is an offer to a select identified group of persons, not exceeding 200 in a financial year (excluding QIBs and ESOP employees), per the prescribed rules, and with payment through banking channels, not cash. Option C is wrong on both limit and cash. Option D is wrong because advertising to the public makes it a public offer.
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