What is a private placement?

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What is a private placement?

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What is a private placement?

Explanation & AnswerSolution by a verified expert

Explanation

Private placement offers securities to accredited investors through financial institutions.
It is a faster way of inviting applications through issue of a memorandum and not a full fledged prospectus.  So, it requires less formalities, time and cost as compared to a general public offer.
A company can offer private placement only after the approval of existing shareholders by passing a special resolution in a general meeting.

Verified Answer

Private placement is the offer of company's securities to a specified group of investors through financial institutions rather than inviting the public at large.

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