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    Question

    Private placement of securities, as provided under the

    Companies Act, which of the following statements is correct?
    A A private placement can be made to an unlimited number of persons, including qualified institutional buyers and employees under a stock option scheme Correct Answer Incorrect Answer
    B A private placement is allowed to more than fifty persons if the number is prescribed by regulations, including qualified institutional buyers and employees under a stock option scheme Correct Answer Incorrect Answer
    C A private placement may be made to a select group of persons, not exceeding two hundred, and may include qualified institutional buyers and employees under a stock option scheme Correct Answer Incorrect Answer
    D A private placement must be made to a select group of persons whose number does not exceed two hundred, excluding qualified institutional buyers and employees under a stock option scheme Correct Answer Incorrect Answer
    E A private placement is restricted to qualified institutional buyers and employees under a stock option scheme, without a limit on the number of persons Correct Answer Incorrect Answer

    Solution

    Section 42. Offer or invitation for subscription of securities on private placement: (2) A private placement shall be made only to a select group of persons who have been identified by the Board (herein referred to as ā€œidentified personsā€), whose number shall not exceed fifty or such higher number as may be prescribed [excluding the qualified institutional buyers and employees of the company being offered securities under a scheme of employees stock option in terms of provisions of clause (b) of sub-section (1) of section 62], in a financial year subject to such conditions as may be prescribed.

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