PROSPECTUS

Meaning: Any Document describe or issued as prospectus.

Prospectus Include:
-Shelf Prospectus Sec 31
-Red Herring Prospectus Sec 32
-Any notice,circular, advertisement or other document inviting offer from public
for the subscription of securities.

ISSUE OF SECURITIES
Public Company
a) By issuing Prospectus. Private Company
b) By way of right issue or Bonus b) By way of right issue or Bonus
Issue with the provisions of this Act Issue with the provisions of this Act
(In case of Listed company or (In case of Listed company or
company which intends to get listed, company which intends to get listed,
with provisions of SEBI Act 1992) with provisions of SEBI Act 1992)
c) b) By Private Placement Sec 42 c) By Private Placement Sec 42

PRIVATE PLACEMENT SEC 42 (Other Than Public Offer)

Every private Placement must be in compliance with the provisions of this

section.

What is Private Placement?

Means any offer of securities or invitation to subscribe securities to a selected

group of persons by a company through issue of a private placement offer letter
and which satisfies the conditions specified in this section.
Conditions for Private Placement
The following are the conditions through which invitation can be made
Offer Letter: May make private placement through issue of a private placement
offer letter
Maximum Number of Persons: The offer or invitation to subscribe shall not be
made during the entire F.Y to more than,
a) 50
b) Such higher number of persons as may be prescribed (i.e 200 is the
prescribed limit )

Exclude Followings While computing number of persons.

a) Qualified Institutional Buyer
b) Employee of the company (To whom the securities have been offered
under the Employees Stock Option Plan u/s 62(1))

Recording Of names and filing of complete Information:

a) Offers shall be made only to persons whose names are recorded by the
company prior to the
invitation

b) The Person to whom offer shall be made shall receive such offer by name.
c) A complete record of such person shall be kept by the company to whom
the offer have been made.
d) complete information about such offer shall be filed with the Registrar
within 30 days of circulation of the Private placement Offer Letter.

Cash not to be Accepted: All monies shall be paid by cheque or demand draft or
other banking channels not by cash.
Moneys to be kept in separate Bank A/c:

Monies received shall be kept in a separate bank account and shall be utilised
only for

adjustment
a) against allotment of securities or
b) the repayment of monies if unable to allot securities.

Allotment to be made within 60 days:

shall allot its securities within 60 days from the date of receipt of the
application money

What if fail to allot within 60 days

a) Company shall repay the application money within 15 days and

b) If fails to repay apllication money within 15 days it shall be liable to pay
with interest @ of 12 % per annum from the expiry of 60th day

No further offer pending the earlier offer:

No fresh offer or invitation shall be made unless

a) The allotments have been completed or

b) Invitation has been withdrawn or abandoned by the company.

No Public Advertisement:

Company shall not publish any advertisements or utilise any media to inform
large public about such offer.

Filing of return of Allotment:

In the manner prescribed.

The return of allotment shall contain

a) Full name of th security holder

b) Address of the security holder.
c) Number of securities allotted
d) Other relevant information as may be prescribed.

Penalties:

Default in allotment of securities

Person Liable Penalties

Company, Promoters, upto amount involved in the offer or

Directors invitation, or
2 crore Rupees

Whichever is Higher
Company shall also refund within a period of 30
days of the order.