Difference Between Private Placement And Preferential Allotment | Semantic Taxgen Pvt Ltd

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Difference between private placement and preferential allotment

July 02, 2024

difference between private placement and preferential allotment

The term private placement is governed by Section 42, “offer or invitation for subscription of securities on private placement,” of the Companies Act, 2013, and private placement shall be made only to a select group of persons who have been identified by the board.

The term preferential allotment is governed by Section 62(1) (c) of the Act and Rule 13 of the Companies (Share Capital and Debentures) Rules, 2013, and it means issues of shares or other securities to a selected person or group of f people. Hence, preferential allotment is part of the private placement.

Preferential allotment is one of the concepts, and private placement is one of the procedures through which we can issue securities. The preferential allotment follows the procedure of private placement and shall be incomplete without the procedure of private placement.

difference between private placement and preferential allotment

Conclusion:

The term private placement has a wider scope as compared to preferential allotment, so we can say that every preferred allotment is a private placement, whereas every private placement is not a preferred allotment. Private placement and preferential allotment are both ways for companies to raise capital quickly by raising or issuing securities without a public offering.

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DISCLAIMER: The information provided in this article is intended for general informational purposes only and is based on the latest guidelines and regulations. While we strive to ensure the accuracy and completeness of the information, it may not reflect the most current legal or regulatory changes. Taxpayers are advised to consult with a qualified tax professional or you may contact to our tax advisor team through call +91-9871990777 or info@semantictaxgen.in the appropriate government authority to verify the accuracy of the information and to obtain advice on their specific tax situations.

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