Private placement prohibition: unofficial premia and public invitations are not private placements and attract penal action. Private offers of equity marketed via brokers, advertisements, mass mailings or by floating rights of renunciation with unofficial premia cannot be treated as private placement when they effectively make shares available beyond the immediate offerees; such transactions fall under prospectus and public offer rules. Companies, promoters and intermediaries conducting these transactions or collecting unofficial premia without proper accounting commit serious contraventions of company law and may face penal consequences; marketing rights of renunciation by a private company is an impermissible public invitation.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Private placement prohibition: unofficial premia and public invitations are not private placements and attract penal action.
Private offers of equity marketed via brokers, advertisements, mass mailings or by floating rights of renunciation with unofficial premia cannot be treated as private placement when they effectively make shares available beyond the immediate offerees; such transactions fall under prospectus and public offer rules. Companies, promoters and intermediaries conducting these transactions or collecting unofficial premia without proper accounting commit serious contraventions of company law and may face penal consequences; marketing rights of renunciation by a private company is an impermissible public invitation.
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