Fundraising Support

A private placement follows Section 42 of Companies Act 2013 read with Rule 14 of Companies (Prospectus and Allotment of Securities) Rules 2014. The company must issue a Private Placement Offer cum Application Letter in Form PAS-4, collect application money in a separate bank account, pass a special resolution, allot within 60 days of receipt of application money, and file Form PAS-3 (Return of Allotment) with the RoC within 15 days of allotment. Failure to allot within 60 days triggers a mandatory refund with 12% interest under Section 42(6).

Section 56(2)(viib) of ITA 1961 (angel tax on share premium received by closely held companies) was abolished with effect from April 1, 2025 by Finance Act 2024. For shares issued on or after that date, no angel tax applies regardless of whether the investor is resident or non-resident. For shares issued before April 1, 2025, the old provision and CBDT Notification No. 29/2023 safe harbours (DCF, NAV, comparable company method) remain applicable for any pending assessment.

Any issue of equity instruments (equity shares, compulsorily convertible preference shares, compulsorily convertible debentures) to a person resident outside India under FEMA 20(R) — Foreign Exchange Management (Non-Debt Instruments) Rules 2019 — requires reporting in Form FC-GPR on the RBI FIRMS portal. The filing must be made within 30 days of the date of issue of instruments. The authorised dealer bank certifies the filing. Late filing attracts compounding under FEMA 13(R).

Yes. A rights issue to existing shareholders is governed by Section 62(1)(a) of Companies Act 2013 and does not require Form PAS-4 or a special resolution. The offer letter must be dispatched to all existing shareholders in proportion to paid-up capital, with a minimum offer period of 15 days and maximum 30 days. If any shareholder renounces rights in favour of an outsider, the outsider must not be disqualified under Section 62(1)(b). Form PAS-3 is still required post-allotment for RoC filing within 15 days.

For unlisted private companies, Section 62(1)(c) read with Rule 13 of Companies (Share Capital and Debentures) Rules 2014 requires a special resolution and a valuation report from a Registered Valuer (Securities or Financial Assets class) under Companies Act 2013 Section 247 read with Companies (Registered Valuers and Valuation) Rules 2017. The price per share must not be less than the fair value determined by the Registered Valuer. The valuation report must be obtained before the board resolution authorising the allotment.