PAS – 4

The Private Placement Offer Letter shall contain the following:


a. Name, address, website and other contact details of the company indicating both registered office and corporate office;

b. Date of incorporation of the company;

c. Business carried on by the company and its subsidiaries with the details of branches or units, if any;

d. Brief particulars of the management of the company;

e. Names, addresses, DIN and occupations of the directors;

f. Management’s perception of risk factors;

g. Details of default, if any, including therein the amount involved, duration of default and present status, in repayment of –

i) statutory dues;

ii) debentures and interest thereon;

iii) deposits and interest thereon;

iv) loan from any bank or financial institution and interest thereon.

h. Names, designation, address and phone number, email ID of the nodal/ compliance officer of the company, if any, for the private placement offer process;


a. Date of passing of board resolution;

b. Date of passing of resolution in the general meeting, authorizing the offer of securities;

c. Kinds of securities offered (i.e. whether share or debentures) and class of security;

d. price at which the security is being offered including the premium, if any, along with justification of the price;

e. name and address of the valuer who performed valuation of the security offered;

f. Amount which the company intends to raise by way of securities;

g. Terms of raising of securities: Duration, if applicable, Rate of dividend or rate of interest, mode of payment and repayment;

h. Proposed time schedule for which the offer letter is valid;

i. Purposes and objects of the offer;

j. contribution being made by the promoters or directors either as part of the offer or separately in furtherance of such objects;

k. Principle terms of assets charged as security, if applicable;


i. Any financial or other material interest of the directors, promoters or key managerial personnel in the offer and the effect of such interest in so far as it is different from the interests of other persons.

ii. details of any litigation or legal action pending or taken by any Ministry or Department of the Government or a statutory authority against any promoter of the offeree company during the last three years immediately preceding the year of the circulation of the offer letter and any direction issued by such Ministry or Department or statutory authority upon conclusion of such litigation or legal action shall be disclosed

iii. remuneration of directors (during the current year and last three financial years);

iv Related party transactions entered during the last three financial years immediately preceding the year of circulation of offer letter including with regard to loans made or, guarantees given or securities provided

v. Summary of reservations or qualifications or adverse remarks of auditors in the last five financial years immediately preceding the year of circulation of offer letter and of their impact on the financial statements and financial position of the company and the corrective steps taken and proposed to be taken by the company for each of the said reservations or qualifications or adverse remark

vi. Details of any inquiry, inspections or investigations initiated or conducted under the Companies Act or any previous company law in the last three years immediately preceding the year of circulation of offer letter in the case of company and all of its subsidiaries. Also if there were any prosecutions filed (whether pending or not) fines imposed, compounding of offences in the last three years immediately preceding the year of the offer letter and if so, section-wise details thereof for the company and all of its subsidiaries

vii. Details of acts of material frauds committed against the company in the last three years, if any, and if so, the action taken by the company


(a) the capital structure of the company in the following manner in a tabular form-

(i) (a) the authorised, issued, subscribed and paid up capital (number of securities, description and aggregate nominal value);

(b) size of the present offer;

(c) paid up capital

(A) after the offer;.

(B) after conversion of convertible instruments (if applicable)

(d) share premium account (before and after the offer)

(ii) the details of the existing share capital of the issuer company in a tabular form, indicating therein with regard to each allotment, the date of allotment, the number of shares allotted, the face value of the shares allotted, the price and the form of consideration. The issuer company shall also disclose the number and price at which each of the allotments were made in the last one year preceding the date of the offer letter separately indicating the allotments made for considerations other than cash and the details of the consideration in each case;

(b) Profits of the company, before and after making provision for tax, for the three financial years immediately preceding the date of circulation of offer letter;

(c) Dividends declared by the company in respect of the said three financial years; interest coverage ratio for last three years (Cash profit after tax plus interest paid/interest paid) 46

(d) A summary of the financial position of the company as in the three audited balance sheets immediately preceding the date of circulation of offer letter;

(e) Audited Cash Flow Statement for the three years immediately preceding the date of circulation of offer letter;

(f) Any change in accounting policies during the last three years and their effect on the profits and the reserves of the company.


a. the company has complied with the provisions of the Act and the rules made thereunder;

b. the compliance with the Act and the rules does not imply that payment of dividend or interest or repayment of debentures, if applicable, is guaranteed by the Central Government;

c. the monies received under the offer shall be used only for the purposes and objects indicated in the Offer letter;

I am authorized by the Board of Directors of the Company vide resolution number ___________ dated ___________ to sign this form and declare that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been complied with. Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by the promoters subscribing to the Memorandum of Association and Articles of Association

It is further declared and verified that all the required attachments have been completely, correctly and legibly attached to this form.





PAS – 5

Date when approval of the relevant authority (board or the shareholders, as the case may be) obtained for the current Private Placement Offer Letter :

Amount of the offer:

Date of circulation of private placement offer letter:

Following details (in a tabulate statement) of the persons to whom private placement offer letter has been circulated :-


(ii) Father’s name

(iii) Complete Address including Flat/House Number, Street, Locality, Pin Code

(iv) Phone number, if any

(v) email ID, if any

(vi) Initial of the Officer of the company designated to keep the Record.


Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.

28 responses to “PRIVATE PLACEMENT

  1. Sir,
    I would personally like to thank you, for your continued efforts, to make budding professionals understand the nitty-gritty of the new Companies Act 2013.
    while replying to my earlier queries you have asked me to summarise the procedure of capital infusion.

    I have summarise the procedure required to be followed at the time of infusion of additional capital as follows:

    Procedure for Further Issue of Capital – Private Placement

    1. Board Meeting for Resolving upon Infusion Of Additional Capital
    2. Board Meeting for Approving Draft Valuation Report & for fixing the date of EGM
    3. Calling Extra Ordinary General Meeting for approving the Private Placement Issue
    4. Issue of Offer Letter & Share Application Form
    5. Acceptance of Offer & submission of Share Application Form
    6. Remittance of Share Application Money
    7. Allotment of Shares
    8. Franking of share Certificate
    9. Actual dispatch of Share Certificate


    Checklist Under Section 42 of Companies Act 2013

    1. Any offer not in compliance with this section shall be treated as Public Offer
    2. All monies payable towards subscription of securities shall be paid through Cheque or Demand Draft but not by Cash
    3. Securities shall be allotted within 60 days from the date of receipt of funds
    4. If the Company is not able to allot the shares within 60 days it shall refund the application money within 15 days from the date of completion of sixty days of receipt of subscription money.
    If the Company could not refund the money as mentioned above it shall be liable to repay that money with interest @12% p.a. from the expiry of 60th day.
    5. Monies received under this section shall be kept in the separate Bank Account
    6. Monies received on application shall not be utilised for the purpose other than (i) for adjustment against allotment of securities or ii) for repayment of monies where company is unable to allot securities

    7. No company offering securities under this section shall release any public advertisement or utilise any media, marketing or distribution channels or agents to inform the public at large

    8. Company shall file Return of allotment.
    30 days from allotment in form PAS 3

    9. If Contravention is made under this section Company & every officer shall be liable for penalty which may extend up to 2 crore Rupees.

    Checklist under Companies (Prospectus And Allotment Of Securities) Rules, 2014.

    1. Private Placement Offer Letter & Application in Form PAS 4
    2. Proposed Offer must be approved by shareholder by Special Resolution
    3. Such Offer cannot be made to more than 200 persons
    4. No offer can be made unless Allotments with respect to offer or invitation made earlier is completed
    5. The value of offer or invitation shall be with an investment size of not less than Rs. 20,000/-
    6. The Payment towards subscription shall be made from the Bank Account of the subscriber and the Company shall keep the record of the Bank Account from where such payment for subscription have been received
    7. Record of Private Placement shall be maintained in From PAS 5
    8 Such Records shall be furnished within the period of 30 days of circulation of Private Placement Offer
    9 A Return of allotment shall be filed with Registrar within 30 days from the allotment

    Reporting Checklist under Companies Act 2013

    1. Notifying Special Resolution to ROC vide Form No. MGT14 as per provision of clause 42,117 of Companies Act within 30 days from passing the resolution

    2. Notifying Private Placement Offer letter through form PAS 4 as per provision of clause 42 of Companies Act 2013 Within 30 days from issue of Private Placement offer letter

    3. Notifying Board Resolution for filing Board Resolution for issue & allotment of Shares per provision of 117of Companies Act 2013 Within 30 days of passing resolution
    4. Return of Allotment through form No. PAS 3 per provision of 42of Companies Act 2013 Within 30 days of allotment

    In case of FDI –

    1. Valuation Report as per RBI Notification FEMA 205/2010- RBI Before EGM
    2. Reporting receipt of fund Within 30 days from the receipt of the funds
    3. FCGPR Within 30 days of allotment
    4. Annual return on foreign Assets & liabilities Before July 2015

    Requesting you to correct if something is missed out .


  2. I had a Query Regarding the Filing of The Private Placement. As I could comprehend PAS-3 is Required to be Filed but For UnListed Company are PAS-4 and PAS-5 mandatory for records?


    • PAS – 3 is Return of Allotment for all allotments.
      PAS – 4 is Offer Letter for private placement and a prerequisite for private placement while PAS – 5 is a Register or a Record kept by the company after private placement.


  3. Sir,

    Is there any specific time limit for which Private Placement offer has to be kept open?


    • close reading of Section 42 read with Rule 14, suggest Private Placement Offer letter is not an OPEN document but a CLOSED one.
      As there is no time period for for acceptance of the Offer under the Rules and the Act, a reasonable period shall be presumed under the Contract Act.
      I assume from reading of the Language used, such period should close with end of financial year. Further, all material facts may also be changed with end of Financial Year.


    • can you provide me resolution for the MGT 14 for private Limited Company wants to allot Shares to their Existing Shareholder.?


  4. can any one provide me the format for resolutions to be passed for private placement


  5. can you provide me resolution for the MGT 14 for private Limited Company wants to allot Shares to their Existing Shareholder.?


  6. Sir I want to know whether the Company will be required to comply with Section 62 of the Companies Act, 2013 for the allotment of Equity Shares ?

    Secondly i also want to know that Section 42 says an offer or invitation to subscribe ? what if Company doesn’t makes any invitation or offer ? Can it make an allotment without any invitation or offer ?


  7. priyanka rudra

    is it mandatory to open a separate bank account for receiving the application money????? please advice..


  8. CA. Mahesh Agrawal

    Sir for issue of compulsory redeemable preference shares , Private Placement Offer Letter is mandatory


  9. Sir good info in pvt ltd company the MD has been issuing me shares at premium almost 3 times of last invested share investment by an angel.could I get legal recources/legal expertise/timelines/investment


  10. Dear Aishwarya,

    thanks for such a detailed article. appreciate your good work! ‘

    However, i have few queries. let me take an example. Suppose a private company stock has a face value of 10 rs and market value of 1000 Rs (Rs 990 premium).now any new investor coming in has to bring in a min of 20,000 Rs of face value (so 2000 shares). Now the value for these 2000 shares would be 20,000 * 1000 = 2,000,000 Rs (20 lacs).. now the investors has a limitation and wants to invest only Rs 10 lac. so how do we manage this situation ?


    • Subhajit Bhattacharjee

      I guess if such person is unable to invest the said amount of Rs. 2000000 then he shall not be eligible to participate in the private placement offer!!


  11. Subhajit Bhattacharjee

    Sir I have a question and that is:
    Under the provisions of Section 42 it has been clearly stated that the maximum number of persons to whom offer could be made in the entire Fin. year shall not be more than 50. However under Rule 14 the same provision has been contradicted somehow cause it goes on to say that the same max number of persons could not exceed 200. Is Rule 14 supposed to have an overriding effect or does it simply means that even if the former figure of 50 persons is increased by the CG even then it cannot exceed 200?


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  14. hi..
    Is the amount of private placement included in paid up capital?


  15. whats the minimum time gap required between subsequent private placement? draft rules mentioned time gap of 60 days and minimum 4 in a year. is that applicable? it is nowhere in the act or rules 2013


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  17. Thank you for described the sec. 42 in detail.
    But my question is that –
    section 42 says that The value of offer or invitation shall be with an investment size of not less than Rs. 20,000/
    But silent about allotment amt mean can company allot amt less then 20,000 because law is silent about allotment amt.
    Example – If the value of offer or invitation more then 20,000 but subscription value is less then 20,000 then this will be allowed because company follow the sec. after offering the amt is more then 20,000 ?


No professional query in comments (but in mail). Only academic discussion here. Comments moderated. Sometime, I reply to your mail ID.

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