Section 41 — Global depository receip t

A company may, after passing a special resolution in its general
meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions,
as may be prescribed.
PART II.—Private placement
3[42. Issue of shares on private placement basis.—(1) A company may, subject to the provisions of
this section, make a private placement of securities.
(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 “identified persons”), 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 prov isions of clause (b) of
sub-section (1) of section 62], in a financial year subject to such conditions as may be prescribed.
(3) A company making private placement shall issue private placement offer and application in such
form and manner as may be presc ribed to identified persons, whose names and addresses are recorded by
the company in such manner as may be prescribed:
Provided that the private placement offer and application shall not carry any right of renunciation.
Explanation I.—”private placement” means any offer or invitation to subscribe or issue of securities to
a select group of persons by a company (other than by way of public offer) through private placement offer-
cum-application, which satisfies the conditions specified in this section.
Explanation II.—”qualified institutional buyer” means the qualified institutional buyer as defined in
the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,
2009, as amended from time to time, made under the Se curities and Exchange Board of India Act, 1992,
(15 of 1992).
Explanation III.—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.
(4) Every identified person willing to subscribe to the private placement issue shall apply in the private
placement and application issued to such person alongwith subscription money pa id either by cheque or
demand draft or other banking channel and not by cash:
Provided that a company shall not utilise monies raised through private placement unless allotment is
made and the return of allotment is filed with the Registrar in accordance with sub-section (8).
(5) 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:
Provided that, subject to the maximum number of identified persons under sub-section (2), a company
may, at any time, make more than one issue of securities to such class of identified persons as may be
prescribed.
(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 expiry of sixty days and if the company fails to repay the application money within the aforesaid

1. The words “with imprisonment for a term which may extend to one year or” omitted by Act 29 of 2020, s. 7 (w.e.f. 21-12-
2020).
2. Subs. by s. 7, ibid., for “three lakh rupees, or with both” (w.e.f. 21-12-2020).
3. Subs. by Act 1 of 2018, s. 10 (w.e.f. 7-8-2018).

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.
(7) No company issuing 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 issue.
(8) A company making any allotment of securities under this section, shall file with the Registrar a
return of allotment within fifteen days from the date of the allotment in such manner as may be prescribed,
including a complete list of all allottees, with their full names, addresses, number of securities allotted and
such other relevant information as may be prescribed.
(9) If a company defaults in filing the return of allotment within the period prescribed under sub-section
(8), the company, its promoters and directors shall be liable to a penalty for each default of one thousand
rupees for each day during which such default continues but not exceeding twenty-five lakh rupees.
(10) Subject to sub -section (11), 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 raised through the private placement or two crore rupees, whichever i s lower, and the company
shall also refund all monies with interest as specified in sub -section (6) to subscribers within a period of
thirty days of the order imposing the penalty.
(11) Notwithstanding anything contained in sub-section (9) and sub-section (10), any private placement
issue not made in compliance of the provisions of sub-section (2) shall be deemed to be a public offer and
all the provisions of this Act and the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the
Securities and Exchange Board of India Act, 1992 (15 of 1992) shall be applicable.]