On 5th May, 2022, Ministry of Corporate Affairs, notified Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022. With immediate effect it will amend Companies (Prospectus and Allotment of Securities) Rules, 2014 (Rules).
Key amendment:
- All private placement offer letters are to be accompanied with the details of the applicant in written/electronic form under Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.
An addition proviso is added by Rule 2(i)–
“Provided also that no offer or invitation of any securities under this rule shall be made to a body corporate incorporated in, or a national of, a country which shares a land border with India, unless such body corporate or the national, as the case may be, have obtained Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and attached the same with the private placement offer cum application letter.”
- Offers letters/Invitation for subscription of securities on private placement is issued under Section 42 of Companies Act, 2013.
The Form given in the Rules is modified in the following manner by Rule 2(ii)–
In Annexure of Rules, in Form PAS-4 (Part B)-
“(viii) Tick whichever is applicable:
(a) The applicant is not required to obtain Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to subscription of shares.-…… ;
(b) The applicant is required to obtain Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to subscription of shares and the same has been obtained, and is enclosed herewith.-…….”