The company issued 50000 shares to their parent company is an example of ______.
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: Private Placement
The Companies Act, 2013 (Section 42)describes Private Placement as an offer of securities or invitation to subscribe securities to a select group of persons (like promoters, parent company, institutional investors) through issue of private placement offer letter.
Since the shares are issued specifically to the parent company (a single identified party), it is not a public issue, not ESOP (meant for employees), and not “issue other than cash” unless explicitly stated.