In a private placement, the issuance is offered to specific investors — existing shareholders, a strategic partner, or a limited circle of professional participants. No public offering is made, and outside parties cannot acquire the securities.
The opposite is a public offering, in which securities are offered to an unlimited circle of persons with disclosure of information about the issuance.
For existing minority shareholders, private placement carries the risk of dilution: if new shares are placed in favor of another party, the stake of previous owners in capital and voting rights decreases. The situation is particularly sensitive when the placement price is below fair value — then not only the share but also the value is diluted. To protect against this, legislation provides for a special procedure for adopting such decisions and, in some cases, preemptive rights for existing shareholders to purchase.
Practical conclusion: an announcement of additional issuance through private placement is a reason to understand the terms, not just a routine corporate event. Specific requirements for the approval procedure are established by legislation and the company's charter.