As per rule 14(1) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, a company shall not make an offer or invitation to subscribe to securities through private placement unless the proposal has been previously approved by the shareholders of the company, by a special resolution.

However, a fourth proviso has been added to rule 14(1) of the said rules by the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2020, which provides that in case of offer or invitation of any securities to qualified institutional buyers, it shall be sufficient if the company passes a previous special resolution only once in a year for all the allotments to such buyers during the year.

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