Private Placement Of Securities: New Laws, Better Laws

Introduction

Every company at some point needs to increase its share capital. When it decides to increase its capital, speed and fewer procedural requirements are two factors which are always of concern. This becomes even more crucial when foreign shareholders are involved and time has to be factored for potentially securing "internal" approvals at various levels for those investments by such foreign shareholders. In addition, wire transfers too can sometime take longer than 48 hours. For Indian shareholders or other persons who wish to subscribe to the shares of a company, these constraints may not necessarily exist. While there are many methods to increase the paid-up capital as discussed below, companies often take recourse to private placement for allotting shares and increasing their capital. Private placements can be made by both private and unlisted public companies in accordance with the provisions of the Companies Act, 2013 ("2013 Act"). With the new law