Section 23 of the Companies Act, 2013
Section 23 of the Companies Act, 2013 deals with the ways in which a company can issue securities.
📘 Section 23 – Public Offer and Private Placement
(1) A company may issue securities in the following manner:
(a) For a Public Company:
By Public Offer (i.e., through a prospectus) – also called Initial Public Offer (IPO) or Follow-on Public Offer (FPO).
By Private Placement (under Section 42).
By Rights Issue or Bonus Issue (under Section 62).
(b) For a Private Company:
By Private Placement.
By Rights Issue or Bonus Issue.
Cannot issue securities to the public.
(2) A public company making a public offer shall comply with:
The provisions of this Act; and
The rules made under it; and
The regulations made by SEBI (Securities and Exchange Board of India).
📌 Note: If the company is not listed or not intending to list on a stock exchange, SEBI regulations won’t apply.
(3) Certain classes of public companies (as may be prescribed) shall issue securities only in dematerialized form.
✅ Summary Table:
| Type of Company | Allowed Methods to Issue Securities | Requires SEBI Compliance |
|---|---|---|
| Public Company | IPO, FPO, Private Placement, Rights Issue, Bonus Issue | Yes, for public offer |
| Private Company | Private Placement, Rights Issue, Bonus Issue | No IPO allowed |
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