Question

Offer of securities or invitation to subscribe securities to a select group of persons by a company (other than by way of public offer) is known as:

• A. Sweat equity
• B. Incorporation cost
• C. Private placement of shares
• D. Employee stock option plan

Hint:

Remember the key distinction: Public Offer (to the general public) vs. Private Placement (to a selected group of persons). ESOP and Sweat Equity are specific types of share issues to employees/directors, falling under exceptions or specific regulations, while Private Placement is the general term for non-public offers.

Answer 1

The Correct Option is C

Let's analyze the options: \begin{itemize} \item[(A)] Sweat equity shares: Issued to directors or employees for their contribution other than cash. \item[(B)] Incorporation cost: Expenses incurred in forming a company. Not an offer of securities. \item[(C)] Private placement of shares: An offer of securities made to a select group of persons (identified by the Board, maximum 200 in a financial year excluding QIBs and employees under ESOP), not involving a public offer. This matches the definition given in the question. [Section 42 of the Companies Act, 2013] \item[(D)] Employee stock option plan (ESOP): Offer of shares to employees of the company. While it's to a select group (employees), private placement is the broader, more accurate term for any offer to a select group other than a public offer. \end{itemize} Therefore, the correct answer is Private placement of shares.