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    Question

    Private placement of securities, as provided under the

    Companies Act, which of the following statements is correct?
    A A private placement can be made to an unlimited number of persons, including qualified institutional buyers and employees under a stock option scheme Correct Answer Incorrect Answer
    B A private placement is allowed to more than fifty persons if the number is prescribed by regulations, including qualified institutional buyers and employees under a stock option scheme Correct Answer Incorrect Answer
    C A private placement may be made to a select group of persons, not exceeding two hundred, and may include qualified institutional buyers and employees under a stock option scheme Correct Answer Incorrect Answer
    D A private placement must be made to a select group of persons whose number does not exceed two hundred, excluding qualified institutional buyers and employees under a stock option scheme Correct Answer Incorrect Answer
    E A private placement is restricted to qualified institutional buyers and employees under a stock option scheme, without a limit on the number of persons Correct Answer Incorrect Answer

    Solution

    Section 42. Offer or invitation for subscription of securities on private placement: (2) A private placement shall be made only to a select group of persons who have been identified by the Board (herein referred to as “identified persons”), whose number shall not exceed fifty or such higher number as may be prescribed [excluding the qualified institutional buyers and employees of the company being offered securities under a scheme of employees stock option in terms of provisions of clause (b) of sub-section (1) of section 62], in a financial year subject to such conditions as may be prescribed.

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