Company compliance

Private Placement Compliance Checker — Section 42

Q: What is the maximum number of persons in a private placement offer?

200 persons in a financial year, excluding Qualified Institutional Buyers (QIBs) and employees receiving securities under an ESOP — this cap applies per offer, and the count resets each financial year.

Q: What happens if the 200-person limit is exceeded?

The offer is deemed to be a public offer, which triggers the much more extensive compliance requirements applicable to public issues — including prospectus requirements — that private placement was specifically designed to avoid.

Reviewed by Finin2min Editorial Desk · Last Reviewed 12 September 2026

Screen identified-person limits, offer documentation, banking channel, allotment timing and PAS filings for a private placement.

2-minute answer

Private placement checker for identified persons, 200-person limit, PAS-4, allotment and PAS-3.

Current-law check: Reviewed for source/currentness on 12 September 2026. Re-check any later notification, circular, amendment, rate, deadline or portal instruction before acting.

How to use this page

Private Placement Compliance Checker — Section 42 is best used as a structured decision tool. Enter or compare like-for-like inputs, make the assumptions explicit and test a downside case before relying on the output.

Practical checklist

Use inputs from dated statements, contracts or operating records instead of rough estimates where possible.
Keep units and periods consistent (monthly vs annual, pre-tax vs post-tax, nominal vs real).
Run at least one conservative scenario and identify the assumption that drives the result most.
Use the result as screening evidence and document any professional or legal adjustment separately.

Worked use case

Example: if one assumption changes the answer materially, show that variable as a range instead of presenting a single-point result as certain.

Official-source checks

Related Finin2min guidance

Reviewed for currentness: 12 September 2026. Educational/professional reference; the controlling law, notification, order or official filing instruction prevails.

Screen private placement

Section 42 screen

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Offeree headroom

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Separate limits apply for each kind of security; rights, bonus, ESOP and qualified institutional routes differ.

How This Is Calculated

Private placement of securities under Section 42 is capped at 200 persons in a financial year (excluding QIBs and ESOP allottees) per offer/invitation — exceeding this count converts the offer into a deemed public offer, triggering significantly more onerous public-issue compliance requirements.

Frequently Asked Questions

What is the maximum number of persons in a private placement offer? ▼

What happens if the 200-person limit is exceeded? ▼

Last reviewed: 15 July 2026

Methodology, assumptions and sources

Scope: Checks compliance requirements for a private placement of securities under Section 42 of the Companies Act, 2013, including the offer-recipient limit and the separate-bank-account requirement.

Calculation logic

Check the offer-recipient limit: a private placement offer cannot be made to more than 200 persons in aggregate in a financial year (excluding qualified institutional buyers and employees under an ESOP scheme, per the specific exclusions) — exceeding this limit converts the offer into a deemed public offer, triggering full public-issue compliance instead.
Check the separate-bank-account requirement: application money received for a private placement must be kept in a separate bank account with a scheduled bank and can only be used for allotment of securities or repayment of the money if allotment is not made, per the specific fund-segregation rule.
Check the allotment timeline: securities must be allotted within 60 days of receipt of application money, failing which the company must repay the application money within 15 days of the 60-day expiry (with interest for further delay), per the current provision.

Inputs and assumptions

200-person limit, 60-day allotment window, and the separate-bank-account requirement follow the current Section 42 provisions and the Companies (Prospectus and Allotment of Securities) Rules.
A private placement offer must be made only to persons whose names are recorded by the company prior to the invitation (via a private placement offer letter, Form PAS-4), and each such offer requires a corresponding return of allotment (Form PAS-3) filing — the checker flags these procedural preconditions.

Exclusions and edge cases

No fresh private placement offer can be made unless allotments for all earlier offers have been completed or the earlier offer has been withdrawn/abandoned — a specific sequencing rule the checker flags where the user indicates a prior pending offer.
Does not itself file PAS-3/PAS-4 forms — this checker addresses compliance-condition applicability, with actual filing completed separately on the MCA portal.

Sources

Ministry of Corporate Affairs — official portal

Review status: reviewed and approved by CA Nikhil Gupta on 18 July 2026.

Guides that use this calculator

Background, worked examples and the rules behind these numbers.