Issuance of fresh shares through private placement is one of the most common ways of fundraising by startups. During fundraising, it's essential to recognize that it's not only the legal clauses that hold significance; secretarial compliance is equally crucial to ensure that the company operates in accordance with the law and maintains good governance practices. This in turn requires the startup founders to possess a comprehensive understanding of the regulations outlined in the Companies Act, 2013, when contemplating fundraising activities. The startup’s efforts must be geared towards ensuring compliance with legal provisions and processes, as failure to do so can expose the company to significant penalties.
To understand the exact secretarial procedure for issuing equity shares through private placement, download and read the below article.