Sebi decides to repeal certain circulars related to private placement of securities

Under the Companies Act, 1956, the issuance of securities to 49 people was considered a private placement and the limit was increased to up to 200 under the Companies Act, 2013.

In respect of cases under the Companies Act, 1956, involving the issuance of securities to more than 49 persons but up to 200 persons in a financial year, Sebi had said that companies may avoid penal action, subject to certain conditions.

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The conditions were that the entities had to ‘provide the investors with an option to surrender the securities and receive the refund amount at a price not less than the amount of subscription money paid along with 15 per cent interest p.a. thereon or such higher return as promised to the investors’, as per the circular issued on Wednesday.

Citing that considerable time has elapsed since the repeal of the Companies Act, 1956, Sebi said it has now decided to repeal the circular in this regard.

They ‘shall stand rescinded with effect from 6 months from the date of issue of this circular, without prejudice to the operation of anything done or any action taken under the said circulars,’ it added.