Description of Private Placement process

1. IBD REGULATORY STUDY SESSION I
Regarding
SECURITIES AND EXCHANGE COMMISSION RULES
& REGULATION (2011)
SECTION F3: PRIVATE PLACEMENT AND COLLECTIVE
INVESTMENT SCHEME
November11, 2011

2. Table of Contents
1. What is A Private Placement
2. Limitations of A Private Placement
3. Key Requirements For a SEC Approval
4. Post Transaction Filing Requirements
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3. Definition of Private Placement
Private Placement (PP) is the issue of securities not involving public offering with the approval of
* this points the Securities and exchange commission(“the Commission”).
should be noted
when considering Private Placements by public companies are subject to the following conditions:
a Private
Placement.
The company shall show evidence of its need for fresh funds and satisfy the Commission that
Private Placement is the only viable option to achieve its objective*
The subscribers of the securities must not exceed fifty consisting of Institutional and High Net
Worth Individuals.
The resolution of the company authorizing the placement stating clearly the number of shares
being issued and the price offered, which must be special as defined by Company and Allied
Matters Act,2004 (CAMA) *
The notice of the general meeting authorizing the Private Placement shall be published in two
national dailies with evidence of publication filed with the Commission*
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4. Definition of Private Placement
* this points  The aggregate number of shares offered by a public company should not exceed 30% of its
should be noted
when considering existing issued and paid-up capital prior to the offer. Where the company is ailing, it may
a Private
Placement. offer a higher number of shares, subject to the approval of the Commission*
 The price of the securities of the company, if quoted, shall be on technical suspension during
the period of Private Placement
 The offer shall be for a period not exceeding 10 working days. However, the Commission
may extend the period under special circumstances
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5. Limitations On Private Placement
No Issuer or any person acting on its behalf shall offer for subscription, offer for sale or sell
Manner securities by any form of public invitation, general solicitation or general advertising, including
but not limited to:-
Of  Any advertisement, article, notice or other communication published in any newspaper,
magazine or similar medium or broadcast over television and radio;
 Any seminar or meeting to which those attending have been invited by any general solicitation
Offering or general invitation
 There shall be no more than 35 purchasers of securities offered pursuant to this Regulation.
Provided that the total number of members in the case of private companies shall not exceed
50 after the issue
The Issuer shall exercise reasonable care to ensure that the purchasers of the securities are
Disposal 
not and did not become underwriters which reasonable care may be demonstrated by the
following
of  Making reasonable enquiry to determine whether the purchasers were acquiring the
securities for themselves or for other persons
Securities
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6. Limitations On Private Placement
Obtaining signed written agreement (Investment Letters)from the purchasers that they would
Disposal 
not sell the securities without registering them or qualifying for an exemption from registration
 Making written disclosure to each purchaser prior to sale that the securities have not been
of
registered under the Act and therefore, cannot be resold unless they are registered pursuant
to the Act or unless an exemption from registration is available
Securities
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7. Post Transaction Filling Requirement
 The issuing house shall within ten working days of the close of offer, file a report on the offer
with the Commission
 The report shall contain the following information:
• Names and addresses of the purchasers
• Amount purchased by each Offeree and the mode of payment
• Date of Payment
• Nature of the Offeree
• Amount the company is raising
 The report shall be signed by duly authorized persons
 Every Issuer or Issuing house shall submit to the Commission at the beginning of every
quarter (January, April, July and October), all proposed private placements giving details of the
amount, price, proposed opening and closing dates among others for the purpose of regulating
the timing of issues
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