Private Placement & Fundraising

Guiding you through your due diligence & private placement process.

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What's Included

✓PAS-3 return of allotment
✓PAS-4 private placement offer letter
✓Board and shareholder resolutions
✓SH-7 share capital alteration
✓Valuation report coordination
✓Complete fundraise documentation

How it works

Provide fundraise details

Share the amount, number of shares, and investor details.

AI prepares all documents

PAS-4 offer letter, board resolutions, and valuation report coordinated.

Legal review

All documents reviewed by a qualified company secretary.

Investor signatures

Offer letters sent to investors for acceptance and signature.

Filed with ROC

PAS-3 filed within 15 days of allotment, SH-7 within 30 days of the resolution.

What Section 42 requires

A private company issuing shares to identified investors is making a private placement under Section 42 of the Companies Act, 2013, and the process is prescriptive in a way most first-time founders do not expect. The offer goes only to a list of identified persons approved by the board and authorised by a special resolution. The cap is 200 people in a financial year per kind of security, excluding qualified institutional buyers and employees holding options under an ESOP scheme. The offer letter is Form PAS-4, serially numbered and addressed to a named person — not a generic deck sent to a group. Application money must go into a separate bank account with a scheduled bank and cannot be used for anything until the shares are allotted. It cannot be paid in cash. Shares must be allotted within 60 days of receiving the money; if they are not, the money must be refunded within 15 days of that period ending, and beyond that it carries interest at 12% a year. On the filing side: the special resolution goes to the MCA in Form MGT-14 within 30 days, and the return of allotment in Form PAS-3 within 15 days of allotment.

The mistakes that cost money

Four come up again and again. Taking money before the board has approved the list of identified persons. Letting investor funds land in the regular current account. Circulating a generic offer document instead of a serially numbered PAS-4. And allotting after the 60-day window has closed. The penalty under Section 42 can run to the amount raised or ₹2 crore, whichever is higher, and the company may be ordered to refund investors within 30 days. Even where nobody comes looking, the next round's diligence will find it, and fixing it retrospectively is slower and more expensive than doing it in order.

Check your authorised capital before you sign the term sheet

If the new shares would take you past your authorised capital, you have to increase it first — an ordinary resolution, an amendment to the capital clause of the MOA, and Form SH-7 with the MCA within 30 days of the resolution. It is a short process, but it is a sequencing problem: discovering it after the term sheet is signed puts the closing date at risk for no good reason.

How Bentham runs it

We start from your cap table and the term sheet and work backwards: confirm headroom in the authorised capital, prepare the board and EGM resolutions and the explanatory statement, draft PAS-4 and maintain the PAS-5 record, coordinate the registered valuer's report where one is required, and file MGT-14, PAS-3 and SH-7 on time. You end the round with updated statutory registers and share certificates issued — the things the next investor's lawyer will ask to see.

What is private placement and when do I need it?+

Private placement is the process of issuing shares to a select group of investors (up to 200 per financial year) without a public offering. You need it when raising equity funding from angel investors, VCs, or any private investor. It requires specific MCA filings (PAS-3, PAS-4) within strict timelines.

What is the timeline for private placement compliance?+

PAS-4 (offer letter) must be issued before receiving money. Once shares are allotted, PAS-3 (return of allotment) must be filed with ROC within 15 days. SH-7 (share capital alteration) must also be filed within 30 days. Missing these deadlines attracts penalties up to ₹2 crore.

Do I need a valuation report for private placement?+

Yes. Section 62(1)(c) of the Companies Act requires shares to be issued at a price determined by a registered valuer. The valuation report must be obtained before the board resolution approving the allotment. Bentham coordinates with registered valuers to get this done.

Can I raise money from foreign investors through private placement?+

Yes, but additional FEMA/RBI compliance applies. You need to comply with FDI sectoral caps, pricing guidelines (shares must be issued at or above fair market value for foreign investors), and file FC-GPR with RBI within 30 days of allotment. Bentham handles the additional regulatory requirements.

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