MCA amends the Companies (Prospectus and Allotment of Securities) Rules, 2014; passing of special resolution once a year to suffice for all allotments to qualified institutional buyers during that year

The Ministry of Corporate Affairs (MCA) has in a notification dated October 16, 2020 issued the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2020 (Amendment Rules) to further amend the Companies (Prospectus and Allotment of Securities) Rules, 2014 (Principal Rules).

The Amendment Rules are effective since October 16, 2020.

 

Earlier Position Amended Position Implication
Rule 14:

 

Private placement.

 

(1) For the purposes of sub-section (2) and sub-section (3) of section 42*, a company shall not make an offer or invitation. to subscribe to securities through private placement unless the proposal  has been previously approved by the shareholders of the company, by a special resolution. for each of the offers or invitations:

………………………….

 

 

 

Rule 14:

 

Private placement.

 

(1) For the purposes of sub-section (2) and sub-section (3) of section 42*, a company shall not make an offer or invitation. to subscribe to securities through private placement unless the proposal  has been previously approved by the shareholders of the company, by a special resolution. for each of the offers or invitations:

………………………….

 

Provided also that in case of offer or invitation of any securities to qualified institutional buyers, it shall be sufficient if the company passes a previous special resolution only once in a year for all the allotments to such buyers during the year

 

 

 

By way of insertion of a new proviso, it is clarified that in case of offer or invitation of any securities to qualified institutional buyers, if the company passes a previous special resolution only once in a year the same would suffice for all the allotments to such buyers during the year.

 

For a detailed read, please refer to the hyperlink below.

 

Source: Ministry of Corporate Affairs

Share this:

0