Section 23: Public offer and private placement
This section is for outlining the ways in which public and private companies can issue securities, including public offers and private placements.
The section, clause by clause
What the section says
In plain terms
(1)A public company may issue securities—
A public company can issue securities to the public through a prospectus, or through private placement, or through a rights issue or a bonus issue, in accordance with the relevant provisions.
(1)(a)to public through prospectus (herein referred to as “public offer”) by complying with the provisions of this Part; or
(1)(b)through private placement by complying with the provisions of Part II of this Chapter; or (c) through a rights issue or a bonus issue in accordance with the provisions of this Act and in case of a listed company or a company which intends to get its securities listed also with the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the rules and regulations made thereunder.
(2)A private company may issue securities—
A private company can issue securities through a rights issue or bonus issue, or through private placement, in accordance with the relevant provisions.
(2)(a)by way of rights issue or bonus issue in accordance with the provisions of this Act; or (b) through private placement by complying with the provisions of Part II of this Chapter.
(3)Such class of public companies may issue such class of securities for the purposes of listing on permitted stock exchanges in permissible foreign jurisdictions or such other jurisdictions, as may be prescribed.
(4)The Central Government may, by notification, exempt any class or classes of public companies referred to in sub-section (3) from any of the provisions of this Chapter, Chapter IV, section 89, section 90 or section 127 and a copy of every such notification shall, as soon as may be after it is issued, be laid before both Houses of Parliament.]
The Central Government can exempt certain public companies from some provisions of this Chapter by notification, and a copy of the notification must be laid before both Houses of Parliament.
explanationExplanation.—For the purposes of this Chapter, “public offer” includes initial public offer or further public offer of securities to the public by a company, or an offer for sale of securities to the public by an existing shareholder, through issue of a prospectus.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Subs. by Act 1 of 2018, s. 7, for “an officer of the company” (w.e.f. 9-2-2018).
- 2. Subs. by Act 21 of 2015, s. 6, for “under its common seal” (w.e.f. 29-5-2015).
- 3. The proviso ins. by s. 6, ibid. (w.e.f. 29-5-2015).
- 4. The words “and have the effect as if it were made under its common seal” omitted by s. 6, ibid. (w.e.f. 29-5-2015).
- 5. Ins. by Act 29 of 2020, s. 5, (w.e.f. 30-10-2023).
This section refers to
Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.