BLUEPRINT

Legislative History [Slide 2]

It is important to study the jurisprudence involved which helps to understand the statutory
provisions framed. Companies prior to 2000 were issuing numerous private placement or
preferential issues with no limit on numbers of such offers in a year. So, amendment act 2000 was
introduced which inserted a threshold of persons to whom shares could be allotted u/s 67(3) of old
act. Even though the statutory provision was present companies still found a way to surpass the
compliance adopting aggressive interpretations and avoiding compliances. The binding interpretation
of “deemed public issue” was settled by SC in a landmark case of “Sahara Real Estate Corporation
Limited.”

Provisions of Companies Act, 2013 [Slide 3]

1. Section 25(2)- Deemed public offer

2. Section 42- Private Placement
3. Rule 14 – Companies (Prospectus and Allotment of Securities), 2014-

Interpretation of Courts [Slide 4]

1. FabIndia Oversees Private Limited – SEBI Informal Guidance [Slide 4-5]

Company is a private limited company, before issuing IPO wished to gift certain amount of
shares to thousands of artisans/ small and marginalised farmers exceeding the limit of 200
investors.

Issues
- Whether proposed transaction will be deemed to constitute “public offer”
- Given large number of artisans to whom gift is proposed, whether specific disclosure
with regard to transferor, artisans and small farmers and any other undertaking, will be
required to be made by Company in DRHP for undertaking IPO

2. Utkarsh Small Finance Bank [Slide 6-7]

The Bank issued NCDs to KCL, who further down sold these securities to its clients- 355
investors. The issue being whether down selling of such securities to more than 355 investors
amounts to deemed public offer.
Issues
- Whether the notice failed to comply with the provisions of ILDS Regulation?
- If do, were liable for penalty under S. 15H of SEBI Act?

3. Planify Capital Limited [Slide 8-9]

The company is acting as a fund-raising platform for stat-ups and is engaged in selling shares
of unlisted companies to investors. The company sold its shares to Planify Enterprise Private
Limited, who downsold its shares to 76 investors through the platform of Planify itself. The
issue to be decided was:
- Whether the Planify capital limited was in violation of Section 42(7) as the issue of
shares was through planify platform which involved advertisement on public forum,
prohibited under private placement.

Conclusion [My interpretation]