Question 1

What is private placement and when do I need it?

Accepted Answer

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.

Question 2

What is the timeline for private placement compliance?

Accepted Answer

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.

Question 3

Do I need a valuation report for private placement?

Accepted Answer

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.

Question 4

Can I raise money from foreign investors through private placement?

Accepted Answer

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.

Fundraising

What's Included

How it works

Provide fundraise details

AI prepares all documents

Legal review

Investor signatures

Filed with ROC