Medha Garments Ltd contemplates the issue of equity shares by private placement. Managing Director of the Company suggests that the letter offering the shares can be made out in the prescribed format and issued to the fo

Note to Managing Director of Medha Garments Ltd. Respected Sir, This is reference to your note dated ______, 2021, suggesting to issue private placement letters as per the arrangement, mentioned below: Relatives of the present directors-35 persons; Friends of the present directors- 75 persons; Selected persons from business associates like sellers of raw materials, buyers of products, service providers etc.- 100 persons; Officers of the company, who may be interested in investing in the Medha Garments Ltd.- 40 persons Total number of persons to whom the Letter of Offer is sought to be given: 250 persons In this regard, your kind attention is drawn to the relevant applicable provisions of the Companies Act, 2013, as mentioned hereinafter: Section 42 of the Companies Act, 2013 read with Rule 14(2) of The Companies (Prospectus and Allotment of Securities) Rules, 2014, provides that the offer or invitation to subscribe securities under private placement shall not be made to more than 200 persons in aggregate in a financial year excluding qualified institutional buyers and the employees of the company being offered securities under a scheme of employees stock option. Accordingly, subject to exclusion of the 40 officers of the company, the total number of selected person to whom the offer is proposed to be made under the originally suggested arrangement, would be 210 (250-40). Hence, from the above arrangement, it can be inferred that issuing offer letters to these 210 persons will be in violation of Section 42 of the Companies Act, 2013. Therefore, it is requested that the proposed list of selected persons may kindly be reviewed so that subject to exclusion of the 40 officers of the company, the total number of persons eligible to receive the Private Placement Offer remains within the permissible limit of 200 persons. XXXX Company Secretary