law: Companies Act, 2013 
  PART
  
  II.—Private placement
  42.
  
    Offer
  
  or invitation for subscription of securities on private placement.
  1.      Without prejudice to
  
  the provisions of section 26, a company may, subject to the provisions of this
  
  section, make private placement through issue of a private placement offer
  
  letter.
  2.      Subject to
  
  sub-section (1 ), the offer of securities or invitation to subscribe
  
  securities, shall be made to such number of persons not exceeding fifty or such
  
  higher number as may be prescribed, [excluding qualified institutional buyers
  
  and employees of the company being offered securities under a scheme of
  
  employees stock option as per provisions of clause (b ) of sub-section (1 )
  
  of section 62], in a financial year and on such conditions (including the form
  
  and manner of private placement) as may be prescribed.
  Explanation
  
  I  .—If
  
  a company, listed or unlisted, makes an offer to allot or invites subscription,
  
  or allots, or enters into an agreement to allot, securities to more than the
  
  prescribed number of persons, whether the payment for the securities has been
  
  received or not or whether the company intends to list its securities or not on
  
  any recognised stock exchange in or outside India, the same shall be deemed to
  
  be an offer to the public and shall accordingly be governed by the provisions
  
  of Part I of this Chapter.
  Explanation
  
  II  .—
  
  For the purposes of this section, the expression—
               
  
   i.        
  
    "qualified
  
  institutional buyer’’ means the qualified institutional buyer as defined in the
  
  Securities and Exchange Board of India (Issue of Capital and Disclosure
  
  Requirments) Regulations, 2009 as amended from time to time.
              
  
   ii.        
  
    " private
  
  placement" means any offer of securities or invitation to subscribe
  
  securities to a select group of persons by a company (other than by way of
  
  public offer) through issue of a private placement offer letter and which
  
  satisfies the conditions specified in this section.
  1.     
  2.     
  3.      No fresh offer or
  
  invitation under this section shall be made unless the allotments with respect
  
  to any offer or invitation made earlier have been completed or that offer or
  
  invitation has been withdrawn or abandoned by the company.
  4.      Any offer or
  
  invitation not in compliance with the provisions of this section shall be
  
  treated as a public offer and all provisions of this Act, and the Securities
  
  Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India
  
  Act, 1992 shall be required to be complied with.
  5.      All monies payable
  
  towards subscription of securities under this section shall be paid through
  
  cheque or demand draft or other banking channels but not by cash.
  6.      A company making an
  
  offer or invitation under this section shall allot its securities within sixty
  
  days from the date of receipt of the application money for such securities and
  
  if the company is not able to allot the securities within that period, it shall
  
  repay the application money to the subscribers within fifteen days from the
  
  date of completion of sixty days and if the company fails to repay the
  
  application money within the aforesaid period, it shall be liable to repay that
  
  money with interest at the rate of twelve per cent. per annum from the expiry
  
  of the sixtieth day:
  Provided
  
  that monies received on application under this section shall be kept in a
  
  separate bank account in a scheduled bank and shall not be utilised for any
  
  purpose other than—
  a.     
  
    for
  
  adjustment against allotment of securities; or
  b.    
  
    for
  
  the repayment of monies where the company is unable to allot securities.
  1.     
  2.     
  3.     
  4.     
  5.     
  6.     
  7.      All offers covered
  
  under this section shall be made only to such persons whose names are recorded
  
  by the company prior to the invitation to subscribe, and that such persons
  
  shall receive the offer by name, and that a complete record of such offers
  
  shall be kept by the company in such manner as may be prescribed and complete
  
  information about such offer shall be filed with the Registrar within a period
  
  of thirty days of circulation of relevant private placement offer letter.
  8.      No company offering
  
  securities under this section shall release any public advertisements or
  
  utilise any media, marketing or distribution channels or agents to inform the
  
  public at large about such an offer.
  9.      Whenever a company
  
  makes any allotment of securities under this section, it shall file with the
  
  Registrar a return of allotment in such manner as may be prescribed, including
  
  the complete list of all security-holders, with their full names, addresses,
  
  number of securities allotted and such other relevant information as may be
  
  prescribed.
  10.   If a company makes an
  
  offer or accepts monies in contravention of this section, the company, its
  
  promoters and directors shall be liable for a penalty which may extend to the
  
  amount involved in the offer or invitation or two crore rupees, whichever is
  
  higher, and the company shall also refund all monies to subscribers within a
  
  period of thirty days of the order imposing the penalty.