VPS Construction Private Ltd. is working on a project of constructing 80 well equipped hospitals in 10 different cities. For raising capital, the company offered its securities to 400 investors (which include 150 Qualifi

A. As per the section 42 of the Companies Act, 2013 read with Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014, as a Company Secretary it is required to check the following compliances: To ensure that persons to whom offer or invitation to subscribe securities under private placement may be made not to exceed 200 in the aggregate in a financial year. It is to be noted that any offer or invitation made to qualified institutional buyers or to employees of the company under scheme of employees stock option shall not be considered while calculating the limit of two hundred persons. Issue of private placement offer cum application letter in Form PAS-4 serially numbered and addressed specifically to the person to whom offer is made and shall be sent to him, either in writing or in electronic mode, within 30 days of recording name of such person pursuant to sub-section (3) of Section 42 of Companies Act, 2013. The Company shall maintain complete record of offer letters in Form PAS-5. A return of allotment of securities under section 42 of Companies Act, 2013 shall be filed with the Registrar within fifteen days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registration offices and Fees) Rules, 2014 along with a complete list of all allottees. A company shall issue private placement offer cum application letter only after the relevant special resolution or Board resolution has been filed with the Registrar. Provided that private companies shall file with the Registrar copy of the Board resolution or special resolution with respect to approval under clause (c) of subsection (3) of section 179 of Companies Act, 2013. B. According to Section 56(4) of Companies Act, 2013, Share certificates are to be delivered within 2 months of allotment of shares / 6 months of allotment of debentures. C. According to Section 2(68) of the Companies Act, 2013, a private company cannot have more than 200 Members. Accordingly in the given case reasons for the non-compliance of the provisions of the Companies Act, 2013 shall be as under: Private Company cannot have more than 200 members. Therefore, offer is invalid. Further, the number of persons to whom the securities have been offered exceeding the limits of 200 as prescribed under Section 42 i.e. (400-150 = 250) (400 investors include 150 Qualified Institutional Buyers and employees who have been given securities under ESOP scheme). The record of offer letters has not been maintained in PAS-5. The share certificated has not been issued within 2 months of allotment of shares. Based on the facts, it can be conclude that VPS Construction Private Ltd. has not complied with the provisions of the Companies Act, 2013.