Private Placement Compliance

Overview

Private Placement is one of the most structured and legally recognised methods to raise capital in India by issuing shares or securities to a select group of identified investors. Unlike public offers, it is not open to the general public and follows specific rules under the Companies Act, SEBI guidelines (where applicable), FEMA regulations (for foreign money), and taxation laws.

Companies use Private Placement to raise strategic capital from angel investors, venture capital firms, private equity funds, family offices, or high-net-worth individuals. It is especially preferred by fast-growing startups, businesses planning expansion, or registered entities undergoing Business Setup in India and requiring structured investment.

Lawcify helps companies fully manage Private Placement transactions from planning to documentation, investor compliance, ROC filings, board approvals and record-keeping — ensuring that every step aligns with Indian legal and regulatory frameworks.

Benefits of Private Placement

• Targeted Fundraising: Private Placement allows the company to raise capital from a small number of strategic investors rather than a public offering, keeping control and direction streamlined.
• Lower Regulatory Burden Compared to IPO: Compliance requirements are structured and predictable but significantly lighter than public issue norms.
• Better Valuation Negotiation: Founders can negotiate valuation, exit terms, conversion rights and commercial terms directly with investors in a controlled environment.
• Ideal for Early and Growth Companies: Whether a newly incorporated business after Company Registration or an established entity preparing for expansion, private placement enables flexibility aligned with business stage.
• Confidentiality: Unlike public capital markets, deal terms and share structures remain private between investors and promoters.

Lawcify ensures every benefit is executed with clarity, transparency and compliance — creating confidence for both promoters and investors.

Key Elements of a Private Placement

Important legal and financial components in a Private Placement include:

• Eligibility & Authorisations: Ensuring the company’s Articles of Association allow issuing shares/securities through private placement and passing required board and shareholder resolutions.
• Offer Letter (PAS-4): A mandatory document issued to identified investors with terms, disclosures and required legal statements.
• Share Subscription Terms: Clear mention of security type (Equity / CCPS / Debentures), pricing, lock-in, conversion rights and pre-emptive clauses.
• Investor Compliance: KYC, source-of-funds declaration, and regulatory alignment especially in case of foreign investment.
• ROC Filing & Registers: Filing PAS-3 return of allotment and maintaining statutory registers to reflect the new shareholders.

With Lawcify, every requirement is completed with accuracy so that the Private Placement remains fully compliant and audit-ready.

Important Details You Should Know

A Private Placement cannot be advertised to the public, and securities can only be offered to a maximum number permitted under the law within a financial year. Payments toward the subscription must be made from a bank account and not through cash or bearer instruments.

Also, once issued, the shares must be recorded in your statutory registers, tax and XBRL filings, and if applicable, aligned with Valuation Advisory, ESOP Policies, and future rounds like Private Equity or Venture Capital.

If the company holds intellectual property such as logos or brand identity, Trademark Registration or Brand Registration creates stronger investor confidence — especially in business regions like Gurgaon where Company Registration Gurgaon and startup investments are rapidly growing.

Types of Private Placements

1️⃣ Equity Private Placement

Equity shares are directly allotted to investors in return for capital. This structure gives voting rights and is commonly used during growth-stage rounds.

2️⃣ CCPS-Based Private Placement

Companies often issue Compulsorily Convertible Preference Shares to investors for flexible dilution and governance planning — especially during VC and Private Equity funding.

3️⃣ Convertible Debenture Placement

Instruments such as CCDs (Compulsorily Convertible Debentures) or optionally convertible notes may be issued when founders and investors want predictable conversion and tax planning flexibility.

4️⃣ Hybrid or Custom Structures

A mix of equity, CCPS or debentures may be used depending on the investment objective, risk profile and future exit structure.

Process to Execute a Private Placement with Lawcify

1. Business Review & Investment Planning: We help identify the right structure, investor eligibility and alignment with business strategy.
2. Documentation & Valuation: Drafting PAS-4 offer letter, subscription agreements, term sheets and coordinating valuation if applicable.
3. Board & Shareholder Approvals: Preparing resolutions, notices and filings as per Companies Act compliance.
4. Fund Receipt & Allotment: Funds are received through permitted banking channels and final allotment is recorded.
5. Filings & Registers Update: Filing PAS-3 and updating statutory registers including shareholding pattern and capital records.

This structured process ensures accuracy, transparency and compliance at every stage — creating a secure environment for both the promoters and investors.

Why Choose Lawcify for Private Placements?

Lawcify brings strong legal expertise, process discipline and investor-level compliance understanding. We work with startups, private companies, investor groups and growth-stage entities across India — especially active hubs like Gurgaon — ensuring every Private Placement is executed smoothly.

• Complete drafting, filing and regulatory compliance handled by experts.
• End-to-end support from initial documentation to final ROC filings.
• Aligned with future growth strategies including ESOPs, further capital rounds and governance upgrades.
• Clarity-driven advisory — no legal jargon, no confusion.
• Trusted by founders, investors and financial advisers for precision and compliance strength.

With Lawcify, your Private Placement becomes a strategic capital move — not just a paperwork process.