The Ministry of Corporate Affairs (MCA) has issued a circular about companies not needing to pass a special resolution with approval of shareholders every time it issues securities to qualified institutional buyers (QIBs). MCA has mentioned that it would be sufficient if a company passes a special resolution only once in a year for all the allotments to such buyers (QIB) during the year. This move of MCA may provide relief for companies going in for private placement of securities

According to the current company law, there are three main modes of raising funds for companies: public issue, rights issue, and private placement. In the case of private companies, only two modes are available: rights issue and private placement. Private companies mostly utilize the Private placement mode even though compliance requirements are high.

This relaxation for private placement to QIBs comes on top of a similar relaxation which was provided two years back, to the companies that were issuing non-convertible debentures (NCDs) above a threshold and within borrowing limits.